The market capitalization rate on the stock of aberdeen wholesale company is 10%. its expected roe is 12%, and its expected eps is $5. if the firm's plowback ratio is 60%, its p/e ratio will be

14.29

Explanation:

Data provided in the question:

The market capitalization rate on the stock = 10%

Expected ROE = 12%

Expected EPS = $5

Firm's plowback ratio = 60%

Now,

Payout ratio = (1 - plowback ratio )

= ( 1 - 0.6 )

= 0.4

Growth rate = ROE × Retention ratio

= ( 0.12 × 0.6 )

= 7.2%

Thus,

Dividend for next period, D1 = EPS × Payout ratio

= $5 × 0.4

= $2

Therefore,

Current price = D1 ÷ ( Market capitalization rate - Growth rate )

= $2 ÷ ( 0.10 - 0.072 )

= $71.43

Hence,

P/E ratio = ( Current price ) ÷ ( EPS  )

= $71.43 ÷ $5

= 14.29

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answer; i believe the answer is 40,600,000;