Grott and Perrin, Inc

question 27

Multiple Choice

Grott and Perrin, Inc., has expected earnings of $3 per share for next year. The firm's ROE is 20%, and its earnings retention ratio is 70%. If the firm's market capitalization rate is 15%, what is the present value of its growth opportunities?

• A) $20
• B) $70
• C) $90
• D) $115