An analyst gathered the following information about a company:

Current annual earnings per share (E0) reported $6.00

Current annual dividend per share (D0) paid on the companys common stock $2.40

Required rate of return on the companys common stock 15.0%

Expected constant growth rate in earnings and dividends 8.0%

If markets are in equilibrium, which of the following statements best describes the companys price-to- earnings (P/E) ratio? The companys P/E ratio based on the constant dividend discount model (DDM) is:

A. less than the companys trailing P/E ratio.

B. the same as the companys trailing P/E ratio.

C. greater than the companys trailing P/E ratio.