ART Has Come Out with a New and Improved Product

question 50

Multiple Choice

ART has come out with a new and improved product. As a result, the firm projects an ROE of 25%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3 per share. Investors expect a 12% rate of return on the shares. At what P/E ratio would you expect ART to sell?

• A)8.33
• B)11.43
• C)14.29
• D)15.25

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Atmosphere Rotating

The movement of the Earth's atmosphere in response to the planet's rotation, influencing weather patterns and climate systems.

High Pressure

Conditions involving significantly greater than normal atmospheric pressure, often affecting material properties and chemical reactions.

Global Belts

Zones around the Earth characterized by specific climatic, geological, or ecological features, such as the tropical or temperate belts.

Prevailing Winds

Winds that blow predominantly from a single general direction over a particular point on the Earth's surface.