Consider Atlantic Technologies and Global Innovations, both of which reported earnings of $1,250,000. Without new projects, both firms will continue to generate earnings of $1,250,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 10 percent. What is the current P/E ratio for each company?

Consider Atlantic Technologies and Global Innovations, both of which reported earnings of $1,250,000. Without new projects, both firms will continue to generate earnings of $1,250,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 10 percent. What is the current P/E ratio for each company?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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