They gave us D1, E1, Retention rate, … and ask us to calculate to PE of the stock. The only think is that I don’t remember at all if it was asked to calculate de trailing or leading PE !!! I automatiquely did It thinking we had to calculate de leading PE and did : (D1/E1)/k-g This question is killing me since june 6th !
I think when they ask you P/E , it is always the leading PE if I am not mistaken…
yeah…agree D1 = Expected Div (projected based on D0 and the growth rate) E1 = Expected Earning trailing uses past numbers
Many thanks Aravinda and Findis07… Ok, but the question seems to be so easy that after the exam I was asking me if I had really well read the question and if they maybe not asked us to calculate the trailing PE instead of leading PE. I remember a world before PE, but don’t remember if it was “trailing” or “leading” Due to the fact that they gave us the ROE, we maybe had to find the trailing payout ratio (D-1/E-1) before dividing it by k-g ???
I dont think so… (P0/E1) = (D1/E1) / ( Ke - g)
gosh, there were two results with .33, am not sure if 13.33 was the one or the other.
i posted that in the other thread but 13.33 was 100% correct
13.33 sounds correct- I calculated it before I looked at the answers and thought it was strange it wasn’t a whole number.
Usually we use leading P/E, but depending on the context, if we want to see the previous track record of the company, we’ll use trailing P/E. But in general, E1 then we use D1 instead of D0