The company plans to reinvest 25 of its earnings at 20 if


1. Next year's earnings are estimated to be $5. The company plans to reinvest 25% of its earnings at 20%. If the cost of equity is 11%, what is the present value of growth opportunities?

2. The market capitalization rate on the stock of Aberdeen Wholesale Company is 9%. Its expected ROE is 11%, and its expected EPS is $3. If the firm's plowback ratio is 60%, its P/E ratio will be _________.

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Financial Management: The company plans to reinvest 25 of its earnings at 20 if
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