No-Growth Industries pays out all of its earnings as dividends. It will pay its next $4 per share dividend in a year. The discount rate is 11%. What is the price-earnings ratio of the company? What would the P/E ratio be if the discount rate were 10%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 9P
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No-Growth industries pays out all of its earnings as dividends.

No-Growth Industries pays out all of its
earnings as dividends. It will pay its next $4
per share dividend in a year. The discount
rate is 11%. What is the price-earnings ratio
of the company? What would the P/E ratio
be if the discount rate were 10%?
Transcribed Image Text:No-Growth Industries pays out all of its earnings as dividends. It will pay its next $4 per share dividend in a year. The discount rate is 11%. What is the price-earnings ratio of the company? What would the P/E ratio be if the discount rate were 10%?
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