You expect Boat and Tow Group to have a ROE of 14%, a beta of 1.25, an expected earnings per share (E₁) of $4.75, and a stable dividend payout ratio of 45%. The expected market risk premium is 9%, and the 10-year Treasury note yield is 2.05%.

a)Calculate the intrinsic value estimate of Boat and Tow Group stock (V₀) according to the constant growth DDM.

b)Calculate the Present Value of Growth Opportunities (PVGO).

c)Calculate the justifiable forward P/E and trailing P/E according to the constant growth DDM.

d)If the expected ROE for Pirate Vision has been revised downward from 14% to 12%, recalculate the V_0, PVGO, and the justifiable forward P/E and trailing P/E.Discuss whether these changes in V_0, PVGO, and the justifiable forward P/E and trailing P/E are consistent with concepts in the subject.