Gamma Ltd's net profit for the last financial year was $173,000 and it paid $110,000 in dividends. It expects net profit to grow at 2.2% p.a. in perpetuity and to maintain a constant dividend payout ratio. Its beta is 1.7, the risk-free rate is 3.6% and the equity risk premium is 7.7%. What is its justified trailing P/E/ ratio?

Select one:

a. 4.48

b. 4.39

c. 2.57

d. 2.51

answer is A