Copyright

Given the low risk in dog food, Misty Evans required rate of return on SDC is 13%. What P/E ratio...

Question:

Given the low risk in dog food, Misty Evans required rate of return on SDC is 13%. What P/E ratio would she apply to the firm s earnings?

Rate Of Return:

The rate of return on any investment is the increase in the value of the investment over a period of time. For stock, the rate of return comes in form of firms earnings, dividends, and capital gains.

Answer and Explanation:


The P/E ratio that she should apply to the earnings is 7.69


{eq}PE\:Ratio = \dfrac{1}{Return} {/eq}

  • Return = 13% or 0.13

{eq}PE\:Ratio = \dfrac{1}{ 0.13 }\\ PE\:Ratio = 7.69 {/eq}


Learn more about this topic:

Loading...
How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
110K

Related to this Question

Explore our homework questions and answers library