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Xitlalic03
Sep 10, 2012, 12:45 AM
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 $3 per share, and investors expect a 12% rate of return on stocks facing the same risks as Web Cites.

What is the sustainable growth rate?
What is the stock price?
What is the present value of growth opportunities?
What is the P/E ratio?
What would the price and P/E ratio be if the firm paid out all earnings as dividends?
What do you conclude about the relationship between growth opportunities and P/E ratios?

Curlyben
Sep 10, 2012, 12:48 AM
While we are happy to HELP we will NOT do the work for you.
Show us what you have done so far and where you are having an issue and we'll go from there.

Xitlalic03
Sep 10, 2012, 10:30 AM
Thank you very much, but I already got it. I don't want the answer I wanted to know how to started. The only way to learn is by making mistakes and I did for while but I finally got it. Thank you