Given a dividend payout ratio of 0.75,a required rate of return of 14.37% and a growth rate of 6%,what is the price-earnings ratio?
A) $ \quad 3.98 \% $
B) $ \quad 6.37 \% $
C) $ \quad 8.96 \% $
D) $ \quad 12.34 \% $

Question

Quizplus · Accepted Answer

Using equation 12.10,we can calculate the P/E ratio as follows: P/E = (0.75)/(0.1437 - 0.06)= 8.96%.

Given a Dividend Payout Ratio of 0 3.98% \quad 3.98 \% 3.98%

Given a Dividend Payout Ratio of 0 $\quad 3.98 \%$