Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 30% of all earnings into the firm. Earnings this year will be $4 per share, and investors expect a 10% rate of return on stocks facing the same risks as Web Cites.

a.	What is the sustainable growth rate?(Round your answer to 2 decimal places.)

Sustainable growth rate

%

b.	What is the stock price?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price

$

c.	What is the present value of growth opportunities (PVGO)?(Round your answer to 2 decimal places.)

PVGO

$

d.	What is the P/E ratio?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

P/E ratio

e.	What would the price and P/E ratio be if the firm paid out all earnings as dividends?(Round your answerto 2 decimal places.)

Price	$
P/E ratio

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