Question: correct answer? A firm is expected to generate earnings per share of $7 in the next year, and these earnings are expected to grow at

correct answer? A firm is expected to generate earnings per share

correct answer?

A firm is expected to generate earnings per share of $7 in the next year, and these earnings are expected to grow at 4.6% per annum in perpetuity. The firm maintains a constant payout ratio of 20%. If the beta of the firm's shares is 1.4, the market risk premium is 7.0% and the risk-free rate is 2.6%, what is the firm's P/E ratio? Select one: a. 4.81 b. 10.26 C. 2.56 d. 19.23

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