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Table 13.12 Selected financial information Required rate of return on equity Growth rate of industry Industry P/E ratio 14% 13% 26 10. Christie Johnson, CFA, has been assigned to analyze Sundanci using the constantdividend-growth price-earnings (P/E) ratio model. Johnson assumes that Sundanci's earnings and dividends will grow at a constant rate of 13\%. (LO 13-2) a. Calculate the P/E ratio based on information in Tables 13.11 and 13.12 and on Johnson's assumptions for Sundanci. b. Identify, within the context of the constant-dividend-growth model, how each of the following factors would affect the P/E ratio. - Risk (beta) of Sundanci. - Estimated growth rate of earnings and dividends. - Market risk premium. Table 13.12 Selected financial information Required rate of return on equity Growth rate of industry Industry P/E ratio 14% 13% 26 10. Christie Johnson, CFA, has been assigned to analyze Sundanci using the constantdividend-growth price-earnings (P/E) ratio model. Johnson assumes that Sundanci's earnings and dividends will grow at a constant rate of 13\%. (LO 13-2) a. Calculate the P/E ratio based on information in Tables 13.11 and 13.12 and on Johnson's assumptions for Sundanci. b. Identify, within the context of the constant-dividend-growth model, how each of the following factors would affect the P/E ratio. - Risk (beta) of Sundanci. - Estimated growth rate of earnings and dividends. - Market risk premium

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