Use the following information to answer questions 5, 6 and 7.

Alpha Corp. has a market capitalization rate of 12%, an ROE of 16% and a plowback ratio of 50%.

What is Alpha Corp's expected earnings growth rate?

Group of answer choices

12%

6%

4%

8%

Alpha Corp's P/E ratio is closest to:

12.5

2

8.3

6.25

Suppose Alpha Corp. decides to pay out 100% of its earnings. What will happen to its P/E ratio?

Group of answer choices

The P/E ratio will increase.

The P/E ratio will decrease.

The P/E ratio will remain constant.

Use the following information to answer questions 8, 9 and 10.

Beta Corp. has a market capitalization rate of 12%, an ROE of 10% and a plowback ratio of 80%.

What is Beta Corp's expected earnings growth rate?

Group of answer choices

8%

6%

4%

12%

Beta Corp's P/E ratio is closest to:

Group of answer choices

5

1.25

8.3

2.5