Consider Pacific Energy Company and Atlantic Energy, Inc., both of which reported earnings of $958,000. Without...

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Consider Pacific Energy Company and Atlantic Energy, Inc., bothof which reported earnings of $958,000. Without new projects, bothfirms will continue to generate earnings of $958,000 in perpetuity.Assume that all earnings are paid as dividends and that both firmsrequire a return of 12 percent. a. What is the current PE ratio foreach company? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.) b. Pacific EnergyCompany has a new project that will generate additional earnings of$108,000 each year in perpetuity. Calculate the new PE ratio of thecompany. (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) c. Atlantic Energy has anew project that will increase earnings by $208,000 in perpetuity.Calculate the new PE ratio of the firm. (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)

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Consider Pacific Energy Company and Atlantic Energy, Inc., bothof which reported earnings of $958,000. Without new projects, bothfirms will continue to generate earnings of $958,000 in perpetuity.Assume that all earnings are paid as dividends and that both firmsrequire a return of 12 percent. a. What is the current PE ratio foreach company? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.) b. Pacific EnergyCompany has a new project that will generate additional earnings of$108,000 each year in perpetuity. Calculate the new PE ratio of thecompany. (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) c. Atlantic Energy has anew project that will increase earnings by $208,000 in perpetuity.Calculate the new PE ratio of the firm. (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)