Calculate the new pe ratio of the company

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Reference no: EM131965958

Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $951,000. Without new projects, both firms will continue to generate earnings of $951,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 14 percent.

a. What is the current PE ratio for each company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) PE ratio times

b. Pacific Energy Company has a new project that will generate additional earnings of $101,000 each year in perpetuity. Calculate the new PE ratio of the company. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) PE ratio times

c. U.S. Bluechips has a new project that will increase earnings by $201,000 each year in perpetuity. Calculate the new PE ratio of the company. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) PE ratio times

Reference no: EM131965958

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