If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 98.70 $ $ $131.70 Low price 73.53 EPS 122.30 89.64 148.33 70.32 116.85 7.98 9.73 10.81 12.20 Earnings are projected to grow at 5 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target stock price b. Low target stock price 4
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 98.70 $ $ $131.70 Low price 73.53 EPS 122.30 89.64 148.33 70.32 116.85 7.98 9.73 10.81 12.20 Earnings are projected to grow at 5 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target stock price b. Low target stock price 4
Chapter13: Direct Foreign Investment
Section: Chapter Questions
Problem 1IEE
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Transcribed Image Text:If you look at stock prices over any year, you will find a high and low stock price for the
year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for
each year. We can use these ratios to calculate a high and a low stock price for the next
year. Suppose we have the following information on a particular company over the past
four years:
Year 1
Year 2 Year 3
Year 4
High price $ 98.70
$
$
$131.70
Low price 73.53
EPS
122.30
89.64
148.33
70.32
116.85
7.98 9.73
10.81
12.20
Earnings are projected to grow at 5 percent over the next year.
a. What is your high target stock price over the next year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is your low target stock price over the next year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
a. High target stock price
b. Low target stock price
4
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