Chapter 13, Problem 19PS

a. MF Corp. has an ROE of $\text{16}\%$ and a plowback ratio of $\text{5}0\%$ . If the coming year’s earnings are expected to be $\$\text{2}$ per share, at what price will the stock sell? The market capitalization rate is $\text{12}\%$ .
b. What price do you expect MF shares lo sell for in three years? $\left(\text{LO 13}-\text{2}\right)$