Start-Up Industries is a new firm that has raised $380 million by selling shares of stock. Management plans to earn a rate of return on equity of 20%, which is more than the 15% rate of return available on comparable-risk investments. Half of all earnings will be reinvested in the firm.

a. What will be Start-Ups ratio of market value to book value? (Do not round intermediate calculations.)

b. What will be Start-Ups ratio of market value to book value if the firm can earn only a rate of return of 10% on its investments?