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I-cannothear-you and Call-your-grandma. 50% of the all customers subscribe to I-cannot-hear- you and pay $20...

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Finance

I-cannothear-you and Call-your-grandma. 50% of the all customers subscribe to I-cannot-hear- you and pay $20 per month. 50% of the customers subscribe to Call-your-grandma and pay $40 per month. CellTel incurs total annual expenses of $120 million generating those revenues. The Management of CellTel has decided to retain 50% of its profits to improve its infrastructure. The company has issued a total of 24 million shares. Shares have a current value of $20 per share. The forward P/E for CellTel is 8.

Compared to the historical P/E for the whole stock market, which of the following is true?

a.

CellTel's P/E is higher
b.

CellTel's P/E is lower
c.

Cannot tell
d.

CellTel's P/E is more or less the same

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