Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $763,000. Without new projects, both firms will continue to generate earnings of $763,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a 13 percent rate of return.

Required:

(a)	What is the current PE ratio for each company? (Round your answers to 2 decimal places. (e.g., 32.16))

	Current PE ratio
Pacific Energy Company		times
U.S. Bluechips, Inc.,		times

(b)	Pacific Energy Company has a new project that will generate additional earnings of $107,000 each year in perpetuity. Calculate the new PE ratio of the company. (Round your answer to 2 decimal places. (e.g., 32.16))

PE ratio

times

(c)	U.S. Bluechips has a new project that will increase earnings by $207,000 in perpetuity. Calculate the new PE ratio of the firm. (Round your answer to 2 decimal places. (e.g., 32.16))

PE ratio

times