1. Globo-Chem 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 .20. Its earnings this year will be $3 per share. Investors expect a 12% rate of return on the stock. At what price would you expect Globo-Chem to sell?
A. $25 | B. $34.29 | C. $42.86 | D. $45.67
2. Charles, a single 55-year-old CEO of a technology start-up company, earns a $2 million base salary with a $400,000 bonus. He is not a participant in any retirement plans at work. What is the maximum deductible IRA contribution Charles can make for the 2018 tax year?
a. $0.
b. $1,000.
c. $4,000.
d. $5,500.
e. $6,500.