The market consensus is that Visual Effects Corporation has an ROE of 9%, has a

beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3.

This year's earnings were $3/share. The annual dividend was just paid. The

consensus estimate of the coming year's market return is 14% and T-Bills currently

offer a 6% return.

a) Find the price at which Visual Effects' stock should sell.

b) Calculate the P/E ratio.