Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $957,000. Without...

 

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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.) 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.) c. U.S. Bluechips has a new project that will increase earnings by $207,000 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.) a. b. C. PE ratio PE ratio PE ratio times times times 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.) 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.) c. U.S. Bluechips has a new project that will increase earnings by $207,000 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.) a. b. C. PE ratio PE ratio PE ratio times times times

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