Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Consider Pacific Energy Company and US Bluechips Inc both of which reported earnings of $9...

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 of $957000 in perpetuity

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 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
 

Apr 11 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions