Business, 04.03.2020 00:09 blackkiki5588

Consider Pacific Energy Company and U. S. Bluechips, Inc., both of which reported earnings of $961,000. Without new projects, both firms will continue to generate earnings of $961,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 14 percent. (Do not round intermediate calculations and round your answers to 2 decimal places. (e. g., 32.16))

a. What is the current PE ratio for each company?
Price / Earnings times
b. Pacific Energy Company has a new project that will generate additional earnings of $111,000 each year in perpetuity. Calculate the new PE ratio of the company.
Price / Earnings times
c. U. S. Bluechips has a new project that will increase earnings by $211,000 in perpetuity. Calculate the new PE ratio of the firm.
Price / Earnings times

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Consider Pacific Energy Company and U. S. Bluechips, Inc., both of which reported earnings of $961,0...

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