Consider Pacific Energy Company and Atlantic Energy, Inc., both of which reported earnings of $969,000. Without new projects, both firms will continue to generate earnings of $969,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 12 percent.

a.

What is the current PE ratio for each company?(Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)

b.

Pacific Energy Company has a new project that will generate additional earnings of $119,000 each year in perpetuity. Calculate the new PE ratio of the company.(Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)

c.

Atlantic Energyhas a new project that will increase earnings by $219,000 in perpetuity. Calculate the new PE ratio of the firm.(Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)