Exhibit 12.9 Use the Information Below for the Following Problem(S)

Exhibit 12.9
Use the Information Below for the Following Problem(S)
The aggregate market currently has a retention ratio of 60 percent, a required rate of return of 12 percent, and an expected growth rate for dividends of 4 percent.
-Refer to Exhibit 12.9.Starting with the initial conditions,you expect the retention ratio to be constant,the rate of inflation to increase by 2 percent,and the growth rate to increase by 1 percent.What is the expected P/E?

A) 4.44
B) 5.00
C) 5.71
D) 6.67
E) 8.00