Consider Pacific Energy Company and U. S. Bluechips, Inc., both of which reported earnings of $961,000. Without new projects, both firms will continue to generate earnings of $961,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 14 percent. (Do not round intermediate calculations and round your answers to 2 decimal places. (e. g., 32.16))

a. What is the current PE ratio for each company?
Price / Earnings times
b. Pacific Energy Company has a new project that will generate additional earnings of $111,000 each year in perpetuity. Calculate the new PE ratio of the company.
Price / Earnings times
c. U. S. Bluechips has a new project that will increase earnings by $211,000 in perpetuity. Calculate the new PE ratio of the firm.
Price / Earnings times

Resources that are valuable but not rare can be categorized asanswers: organizational weaknesses.distinctive competencies.organizational strengths.complementary resources and capabilities.

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

Acompany that adapts its product mix to meet the needs of a new market is using which of the following global marketing strategies market development diversification strategy product development undiversified