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Price earnings ratio using two different discount rates

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No-Growth Industries pays out all of its earnings as dividends. It will pay its next $3 per share dividend in a year. The discount rate is 12%.

a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

P/E ratio =

b. What would the P/E ratio be if the discount rate were 10%? (Round your answer to 2 decimal places.)

P/E ratio =

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a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ...

Solution Summary

The solution helps in estimating price earnings ratio using two different discount rates.

$2.19