No-Growth Industries pays out all of its earnings as dividends. It will pay its

Question

No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 21%. a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio b. What would the P/E ratio be if the discount rate were 20%? (Round your answer to 2 decimal places.) P/E ratio check my workView Hint #1referencesebook & resources eBook: Growth Stocks and Income Stocks Worksheet Difficulty: Intermediate Learning Objective: 07-04 Interpret price-earnings ratios.

Explanation / Answer

No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 21%. a. What is the price-earnings ratio of the company

Dividend per share $6.00

Discount rate 21.00%

79/6=13.16

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