A firm practices a dividend payment policy of 60%. The equity has systematic risk factor of 1.50. If the firms earnings growth rate is 5.0% and actual P/E is 16.0, what is the justified P/E using the regression fundamental equation = 10.5 +(2.5*Dividend payout ratio) + (-0.05)*Beta + (11.2*Earning growth rate)?

Select one:

a. 11.28

b. 12.49

c. 12.18

d. 11.18