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:

Winfield Scott

A United States Army general, and unsuccessful presidential candidate of the Whig Party in 1852, known for his roles in the Mexican-American War and the Civil War.

Surround And Constrict

A tactical maneuver designed to encircle and apply pressure on a specific target or area, reducing its mobility or effectiveness.

Forts

Military structures designed for defense, typically fortified buildings or strategic positions used to protect against enemy attacks.

Union Forces

The armies and military units that fought for the Northern states during the American Civil War.