No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 14%. a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would the P/E ratio be if the discount rate were 10%? (Round your answer to 2 decimal places.)

No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 14%. a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would the P/E ratio be if the discount rate were 10%? (Round your answer to 2 decimal places.)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter7: Stocks (equity) - Characterstics And Valuation

Section: Chapter Questions

Problem 14PROB

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No-Growth Industries pays out all of its earnings in dividends. It will pay its next $4 per share dividend in a year. The discount rate is 8%.a. What is the price-earnings ratio of the company? b. What would the P/E ratio be if the discount rate were 5%?
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