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Web Cites Research projects a rate of return of 2 0 % on new projects. Management plans to plowback 3 0 % of all earnings
Web Cites Research projects a rate of return of on new projects. Management plans to plowback of all earnings into the firm. Earnings this year will be $ per share, and investors expect a rate of return of on stocks. A What is the sustainable growth rate? B What is the stock price? C What is the present value of growth opportunities? DWhat is the PE ratio? E What would the price and PE ratio be if the firm paid out all its earnings as dividends? F what do you conclude aabout the relationship between growth opportunities and PE ratios?
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