revision mock

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December 9, 2015 at 3:08 am #289401
kebeori
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X plc has a dividend yield of 8% and dividend cover of 2.4.

What is the PE ratio for X plc?
December 9, 2015 at 8:52 am #289475
John Moffat
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Dividend yield = dividend / market value = 0.08
Therefore market value = dividend / 0.08 = 12.5 x dividend
Dividend cover = earnings / dividend = 2.4
Therefore earning = 2.4 x dividend

PE = MV / earnings = 12.5 x dividend / 2.4 x dividend = 5.21
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