BKM Ch$13$ problems $4,18,25$

Deployment Specialists pays a current $($annual$)$ dividend of $$1$ and is expected to grow at $20\%$ for two years and

then $4\%$ thereafter. If its required return is $8\mathrm{.}5\%,$ what is its intrinsic share value?

Even Better Products has come out with an even better product. As a result, the firm projects an ROE of $20\%$ and

it will maintain a plowback ratio of $0\mathrm{.}30.$ Its earnings this year were $$2$ per share. Investors expect a $12\%$ rate of

return on the stock.

a$)$ At what price and $\frac{P}{E}$ ratio would you expect the firm to sell?

b$)$ What is the present value of growth opportunities?

c$)$ What would be the $\frac{P}{E}$ ratio and the present value of growth opportunities if the firm planned to reinvest only

$20\%$ of its earnings?