O ? |?https:/ #70 Help Save & Exit Submit Check my work Problem 7-36 P/E Ratios
ID: 1174931 • Letter: O
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O ? |?https:/ #70 Help Save & Exit Submit Check my work Problem 7-36 P/E Ratios (LO4) No-Growth Industries pays out all of its earnings as dividends it will pay its next $2 per share dividend in a year. The discount rate is 10 points 10%. o. What is the price-earnings ratio of the company? (Do not round intermediate calculetions. Round your answer to 2 decimal eBook places.) PVE ratio Print b. What would the P/E ratio be i the discount rate were 4 (Round your answer to 2 decimal places.) PE ratio ??Explanation / Answer
1.
Answer > P/E ratio = 10
Earnings per share = Dividend = 2
Current price of share = 2/10% = 20
P/E ratio is = Current share price / EPS
P/E ratio = 20/2 = 10
2.
Answer > P/E ratio = 25
Earnings per share = Dividend = 2
Current price of share = 2/4% = 50
P/E ratio is = Current share price / EPS
P/E ratio = 50/2 = 25
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