Web Cites Research projects a rate of return of 1 0 % on new projects. Management plans
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Question:
Web Cites Research projects a rate of return of on new projects. Management plans to plow back of all earnings into the firm. Earnings this year will be $ per share, and investors expect a rate of return of on stocks facing the same risks as Web Cites.
a What is the sustainable growth rate?
b What is the stock price?
c What is the present value of growth opportunities PVGO
d What is the PE ratio?
e What would the price and PE ratio be if the firm paid out all earnings as dividends?
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