Upon analyzing the financial statements of Jain Industries, you discover that it is currently retaining 60 percent of its earnings (which were $6 this past year) and is earning a ROE of almost 20 percent. Assuming a risk-free rate of 4 percent and a risk-premium for Jain of 8 percent, how much would you be willing to pay for Jain Industries stock on the basis of the P/E ratio approach?

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The Answer of Upon analyzing the financial statements of Jain Industries, you discover that it is currently retaining 60 percent of its earnings (which were $6 this past year) and is earning a ROE of almost 20 percent. Assuming a risk-free rate of 4 percent and a risk-premium for Jain of 8 percent, how much would you be willing to pay for Jain Industries stock on the basis of the P/E ratio approach?

Upon Analyzing the Financial Statements of Jain Industries, You Discover