Answer:
the PEG ratio is 2.85
Explanation:
The computation of the firm PEG ratio is shown below:
Before that following calculations need to be done
Earnings per share = Earnings ÷Number of shares outstanding
= ($60 million ÷ 20 million shares )
= $3
Now
Growth rate = ROE × Plowback ratio
= 0.10% × 0.70%
= 7%
Now
PE ratio = Current price ÷ EPS
= $60 ÷ $3
= 20
And, finally
PEG ratio is
= (Current price ÷ EPS) ÷ Growth rate
= (20 ÷ 7)
= 2.85
hence, the PEG ratio is 2.85
