TSP 6 10 points At what P/E ratio would you expect the firm to sell 6.00 8.33 The P/E ratios incorporates the information about the company future growth opportunities TSP company has come out with a new product. As a result, the firm project an ROE of 20%, and it will maintain a plowback ratio of 0.30. Its earnings this year will be $2 per share Investors expect a 12 rate of return on the stock Hint: PO/E 1 - (1-1)/(k-ROE"b) No-growth value=E1/ PO - E1/k+PVGO PO/E1 = (1/6) (1 PVGO/PV/Assets in place)) 12.16 11.67 7 10 points What it he value of value of growth opportunities (PVGO) O 8.42 1667 OOOO 6.67 9.65 10 points How much is the present value of growth opportunities as a percentage of no-growth value? This question shows how the ROE would affect the PVGO. O 20% 60% OOOO 40% 80%