Brotech Unlimited Sells at $40 Per Share,and Its Latest 12

Essay

Brotech Unlimited sells at $40 per share,and its latest 12 month earnings were $8 per share,of which $3.20 per share were paid as dividends.
(a)What is Brotech's current P/E ratio?(b)If Brotech's earnings are expected to grow by 9 percent per year,what is the projected price for next year assuming that the P/E ratio remains constant?(c)If you had a required rate of return of 15 percent,expected the dividend payout ratio to remain constant,and dividends to grow at a rate of 9 percent,would you buy this stock?