Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 30% of all earnings into the firm. Earnings this year will be $3 per share, and investors expect a 12% rate of return on stocks facing the same risks as Web Cites. (LO7-2) a. What is the sustainable growth rate?
b. What is the stock price?
c. What is the present value of growth opportunities?
d. What is the P/E ratio?
e. What would the price and P/E ratio be if the firm paid out all earnings as dividends?
f. What do you conclude about the relationship between growth opportunities and P/E ratios?

Each of the following data sets has a mean of x = 10. (i) 8 9 10 11 12 (ii) 7 9 10 11 13 (iii) 7 8 10 12 13 (a) without doing any computations, order the data sets according to increasing value of standard deviations. (i), (iii), (ii) (ii), (i), (iii) (iii), (i), (ii) (iii), (ii), (i) (i), (ii), (iii) (ii), (iii), (i) (b) why do you expect the difference in standard deviations between data sets (i) and (ii) to be greater than the difference in standard deviations between data sets (ii) and (iii)? hint: consider how much the data in the respective sets differ from the mean. the data change between data sets (i) and (ii) increased the squared difference îł(x - x)2 by more than data sets (ii) and (iii). the data change between data sets (ii) and (iii) increased the squared difference îł(x - x)2 by more than data sets (i) and (ii). the data change between data sets (i) and (ii) decreased the squared difference îł(x - x)2 by more than data sets (ii) and (iii). none of the above