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The objective of this problem is to help you understand a claim that Siegel makes in the last part of Chapter 11. Basically, he argues that if the real required rate of return falls, then the price-to-earnings ratio rises, all else equal. Although this problem only asks you to submit the new P/E ratio, you will find it more interesting to also calculate the old P/E ratio for comparison. Suppose that earnings per share for Banana Corp. for the most recent 12 months is $2.95. Suppose also that the required real rate of return on Banana Corp. stock is 8.56%. the real dividend growth rate is 2.22% per year (and expected to remain unchanged for the foreseeable future). the payout ratio is 0.60 hence, the annual dividend today (DO) equals .60 times the earnings per share. CTis ratio is not expected to change.) . Today, the expected real discount rate falls by 1% (e.g., it might fall from 6% to 5%). What is new value of the P/E ratio? (Earnings per share is a historical value and thus is not affected by the change in the discount rate.) Enter the new P/E to one decimal place of accuracy