The Price-earnings ratio of Aberdeen Wholesale Company equals to 14.29.
<h3>What is a P/E ratio?</h3>
Its means the Price-earnings ratio which is used to value a companies by comparing the company's share price to its earnings per share.
<u>Given data</u>
Market capitalization rate = 10%
Expected ROE = 12%
Expected EPS = $5
Plowback ratio is 60%
<h3>What is the Dividend payout ratio?</h3>
= 1 - 0.6
= 0.4
<h3>What is the Expected dividend?</h3>
= 0.4 × $5
= $2
<h3>What is the Growth rate?</h3>
= 0.6 * 12%
= 7.2%
<h3>What is the Firm Value?</h3>
= $2 / (0.10 - 0.072)
= $2 / 0.028
= $71.43
<h3>What is the P/E ratio?</h3>
= $71.43 / $5
= 14.286
= 14.29
Hence, the Price-earnings ratio of Aberdeen Wholesale Company equals to 12.5.
Therefore, the Option D is correct.
Read more about Price earnings ratio
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