Given required rate of return, dividend payout ratio and expected equity return, how would you calculate P/E? Don’t you need the growth rate?
p/e = (d/e)/(k-g) I assure you that there’s something in the example you are looking at which would give you the pieces needed to find g. Do you have ROE (or it’s components under the dupont formula?)
no it gives those three variables and then asks for P/E. Thats it.
Got it. I misread, it said expected return on equity. Which of course is ROE. I’m stupid
post the question
MT327 Wrote: ------------------------------------------------------- > Got it. I misread, it said expected return on > equity. Which of course is ROE. I’m stupid G = ROE * rr PE = earnings multiplier = DPO/ R - G R = K, by thw way, I just use R instead of K to remind myself that you need the REQ rate of rtn in the denominator