Q3.

The table below provides summary data for Johnson & Johnson, along with Procter & Gamble and Merck, two large cap firms that compete in many segments of Johnson & Johnson's medical and consumer products businesses.

Johnson & Johnson Procter & Gamble Merck

Stock price (per share) $64.92 $47.65 Book value of equity $39,318 $66,760 $17,560

(in millions)

Common shares 2,893 3,132 2,168

outstanding (in millions)

Net income (in millions) $11,053 $10,340 $4434

Compute the price-to-earnings (PE) ratios for Procter & Gamble and Merck.

What is the average PE ratio for these two companies?