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 12%.
a. What is the price-earnings ratio of the company?
b. What would the P/E ratio be if the discount rate were 10%?
Dividend per share....... $4.00
Discount rate....... 12.00%
Discount rate (b) ....... 10.00%