Business, 26.02.2020 00:35 ashleyd2473
Consider Pacific Energy Company and Atlantic Energy, Inc., both of which reported earnings of $969,000. Without new projects, both firms will continue to generate earnings of $969,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 12 percent. a. What is the current PE ratio for each company?b. Pacific Energy Company has a new project that will generate additional earnings of $112,000 each year in perpetuity. Calculate the new PE ratio of the company. c. U. S. Bluechips has a new project that will increase earnings by $212,000 in perpetuity. Calculate the new PE ratio of the firm.
Answers: 1
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Consider Pacific Energy Company and Atlantic Energy, Inc., both of which reported earnings of $969,0...
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