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 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.Year 1$ 62.1840.302.35a. High target priceb. Low target priceYear 2$67.2943.182.58Year 3-$74.1839.272.73Year 4$78.2746.21High priceLow priceEPSEarnings are expected to grow at 9 percent over the next year.6. What is the high target stock price in one year?32.16.Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g..b. What is the low target stock price in one year?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.2.890

The growth rate of EPS in year 5 is 9%.

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 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: High price Low price: EPS Year 1. $62.18 40.30 2.35 a. High target price. b. Low target price Year 21 $ 67.29 43.18 Year 31 $74.18 39.27 2.73 Earnings are expected to grow at 9 percent over the next year. o. What is the high target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the low target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. D Year 4. $78.27 46.21 2.89

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 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: High price Low price: EPS Year 1. $62.18 40.30 2.35 a. High target price. b. Low target price Year 21 $ 67.29 43.18 Year 31 $74.18 39.27 2.73 Earnings are expected to grow at 9 percent over the next year. o. What is the high target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the low target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. D Year 4. $78.27 46.21 2.89

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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