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 stock.
What price do you expect ART shares to sell for in 4 years?

• A) $53.96
• B) $44.95
• C) $41.68
• D) $39.76

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Definitions:

Assembly Line

A manufacturing process in which parts are added in sequence until the final assembly is produced.

Goods And Services

Products and activities that fulfill the needs or wants of consumers, with goods being tangible items and services being intangible activities or benefits.

Productivity

The effectiveness with which resources are used to produce outputs, crucial for assessing the performance and economic health of an organization.

Labour Hour

The measure of labor input, quantified by the amount of time (in hours) an employee works.