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Consider Pacific Energy Company and US Bluechips Inc both of which reported earnings of $957000 Without new projects both firms will continue to generate earnings

Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $957,000. Without new projects, both firms will continue to generate earnings of $957,000 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  
7.14
times
  
b.  
Pacific Energy Company has a new project that will generate additional earnings of $107,000 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 $207,000 in perpetuity. Calculate the new PE ratio of the firm. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
PE ratio  
times

I need the answer to b and c.

 

Apr 11 2020 View more View Less

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