ART Has Come Out with a New and Improved Product

question 36

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 stock.
What is the present value of growth opportunities for ART?

• A) $8.57
• B) $9.29
• C) $14.29
• D) $16.29

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Definitions:

Cryptographers

Specialists in cryptology who design and analyze algorithms, ciphers, and security systems to encrypt and decrypt messages.

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Tripartite Pact

An agreement signed in 1940 between Germany, Italy, and Japan, forming the Axis Powers during World War II and pledging mutual support.

President Roosevelt

Refers to either Theodore Roosevelt or Franklin D. Roosevelt, both of whom served as President of the United States and left significant impacts on national policy and history.