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Business, 03.04.2020 02:29 tierann3050

Start-Up Industries is a new firm that has raised $200 million by selling shares of stock. Management plans to earn a 24% rate of return on equity, which is more than the 15% rate of return available on comparable-risk investments. Half of all earnings will be reinvested in the firm. a. What will be Start-Up’s ratio of market value to book value?b. What will be Start-Up’s ratio of market value to book value if the firm can earn only a rate of return of 10% on its investments?

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