Final answer:
The P/E ratio of a firm with a PVGO of 0 and a market capitalization rate of 10.5% is calculated by the reciprocal of the capitalization rate, which gives us 9.52.
Step-by-step explanation:
The P/E ratio (price-to-earnings ratio) is calculated by dividing the market price per share by the earnings per share (EPS) of a company.
The student is asking about the price-to-earnings (P/E) ratio of a firm with a present value of growth opportunities (PVGO) of 0 and a market capitalization rate of 10.5%. The P/E ratio can be calculated using the formula P/E = 1/r, where 'r' is the required rate of return (or the market capitalization rate). Since the PVGO is zero, the entire worth of the firm is based on its current earnings, which simplifies the formula to just the reciprocal of the capitalization rate.
Using the given data, the firm's P/E ratio is: 1 / 0.105 = 9.52
So the answer is C. 9.52.