Four years ago, Lorexmon Corporation paid a dividend of $1.5 per share whereas Clerexmon Corporation paid a dividend of $2.5 per share yesterday. Suppose both the firms reported earnings of $1.1 million in their financial disclosure. Both firms will continue to realize same earnings in perpetuity without an additional investment. Suppose further that all earnings are paid as dividends and that required rate of return for each firm is 12.5 percent. Each firm has 1.25 million shares of common stock outstanding. Required: 1. Compute the current PE ratio of both firms. 2. Lorexmon Corp. gets additional investment for a new project that will produce additional earnings of $175,000 every year in perpetuity. Compute the new PE ratio of this firm.