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Category > Business & Finance Posted 03 Aug 2017 My Price 12.00

Consider Pacific Energy Company and U.S. Blue chips,

Consider Pacific Energy Company and U.S. Blue chips, Inc., both of which reported earnings of $750,000. Without new projects, both firms will continue to generate earnings of $750,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a 14 percent rate of return. 
a. What is the current PE ratio for each company? 
b. Pacific Energy Company has a new project that will generate additional earnings of $100,000 each year in perpetuity. Calculate the new PE ratio of the company. 
c. U.S. Blue chips has a new project that will increase earnings by $200,000 in perpetuity. Calculate the new PE ratio of the firm

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Status NEW Posted 03 Aug 2017 04:08 PM My Price 12.00

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