Calculate the new pe ratio of the company

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Question 1: both of which reported earnings of $630,000. Without new projects, both firms will continue to generate earnings of $630,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 11 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 $100,000 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 $200,000 in perpetu ity. Calculate the new PE ratio of the firm.

Question 2: Typically acquisition costs for inventory can be financed through the use of

overdraft protection.

accounts payable.

working capital.

notes payable.

Reference no: EM132583525

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