III (Common Stock) 15 points XY earns $2 per share. It reinvests 40 percent (b) of...

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III (Common Stock) 15 points XY earns $2 per share. It reinvests 40 percent (b) of it earnings at a return of 20 percent (R) per year/ The required rate of return is 15% a) What is the price of the stock? b) Its premium for growth and PE ratio? The company has come up with a new product which requires is to invest 100 percent of its earnings at a return of 100 percent per year for the next 3 years. After that the company returns to its old policy ofr retaining 40 percent of its earnings and investing them at 20 percent per year. c) What is the new price of the stock? d) Its premium for growth and its PE ratio? e) How much of the premium is due to its growth of 8 percent and how much is from its 100 percent growth III (Common Stock) 15 points XY earns $2 per share. It reinvests 40 percent (b) of it earnings at a return of 20 percent (R) per year/ The required rate of return is 15% a) What is the price of the stock? b) Its premium for growth and PE ratio? The company has come up with a new product which requires is to invest 100 percent of its earnings at a return of 100 percent per year for the next 3 years. After that the company returns to its old policy ofr retaining 40 percent of its earnings and investing them at 20 percent per year. c) What is the new price of the stock? d) Its premium for growth and its PE ratio? e) How much of the premium is due to its growth of 8 percent and how much is from its 100 percent growth