Question

Using the P/E multiples approach to valuation, What is the estimated price of a stock if the firm’s P/E ratio is 18.2 and it’s earnings are $452,000? Assume that there are 100,000 shares of stock outstanding.  




Expert Solution

Want to see the full answer?

Check out a sample Q&A here
Blurred answer
Students who’ve seen this question also like:
Personal Finance
Personal Finance
13th Edition
ISBN: 9781337669214
Author: GARMAN
Publisher: Cengage
Not helpful? See similar books
Personal Finance
Personal Finance
Investing In Stocks And Bonds. 1DTM
marketing sidebar icon
Want to see this answer and more?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.

Related Finance Q&A

Find answers to questions asked by students like you.

Q: A company expects EPS to be $2.52 next year. The industry average P/E ratio is 23.99 and Enterprise…

A: The price to earning ratio is calculated as the ratio of market price of stock and earning per…

Q: If RTM's stock is currently trading at AED 24 and RTM has 25 million shares outstanding, shareholder…

A: Book Value of any company is its total assets less any liabilities and intangible assets. Assets.…

Q: TNT Corporation's stock is currently selling at $36 per share. TNT reported total revenues of $5.26…

A: Price to Sales Ratio The price to sales ratio is a ratio that shows the relationship between the…

Q: What is the market price of a share of stock for a firm with 100,000 shares outstanding, a book…

A: Market Value  / Book Value Ratio = 3.50 Book Value = $3,000,000 Market Value = $3,000,000 * 3.50…

Q: What is the book value per share?   If the stock currently sells for $63 per share, what is the…

A: Given the following information: Additions to retained earnings: $213,000 Dividends paid: $183,000…

Q: For the year 201B, ABC Company's return on common stockholders' equity was 12.5%. Its average…

A: The ratio analysis is performed to analyze the different aspects of financial statements of the…

Q: The following question is based on the following information about the stocks of Whitestone REIT,…

A: Given,   Price Dividend Yield REIT 16 7 HCC 56 2 SNDK 80 2 Let x be shares of REIT, y be…

Q: Assuming a market price per share of $180 for the preferre ock and $9 for the common stock,…

A: The question is based on the concept of Accounting for Shares and Debentures.

Q: Suppose a stock had an initial price of $82 per share, paid a dividend of $1.20 per share during the…

A: Calculation of Dividend Yield and Capital Gains Yield:The dividend yield is 1.46% and capital gains…

Q: Messman Manufacturing will issue common stock to the public for $25. The expected dividend and the…

A: The cost of equity can be computed using the Gordon growth model using the expected dividend, growth…

Q: A company has a reported net income of RM12 million and 60 million shares outstanding. a) Estimate…

A: Net income = RM 12,000,000 Number of shares = RM 60,000,000 P/E Ratio = 14.0

Q: Suppose that in July 2013, Nike Inc. had EPS of $2.29 and a book value of equity of $11.91 per…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Based on the corporate valuation model, a company's total corporate value is $200 million. The…

A: A type of publicly traded security that provides ownership and voting rights to its holder is term…

Q: Compute Topp Company's price-earnings (PE) ratio if its common stock has a market value of $23.79…

A: Price Earning Ratio (P/E Ratio) The purpose of using the price earning ratio which provides the…

Q: For the year 201B, ABC Company's return on common stockholders' equity was 12.5%. Its average…

A: Return on common stockholders' equity indicates the rate of earning of commons stockholders on their…

Q: For the year 201B, ABC Company's return on common stockholders' equity was 12.5%. Its average…

A: Return on common shareholders equity means how much net income is being earned on common…

Q: For the year 201B, ABC Company's return on common stockholders' equity was 12.5%. Its average…

A: The net income is the net profit of the company earned during the period. The net income includes…

Q: You are given the following information: Book value of stockholders' equity = $5 million;…

A: Given information : The market price of the company stock refers to the value at which a rational…

Q: What is earning per share? What is price- earning patio? what is dividends per share ?What is…

A: Earnings per share (EPS) refers to the profit per outstanding share of tock of a public company,…

Q: Suppose a stock had an initial price of $62 per share, paid a dividend of $2.50 per share during the…

A: Here, Initial price of Stock is $62 Ending Price of Stock is $72 Dividend per share is $2.50

Q: What is the market price of a share of stock for a firm with 100,000 shares outstanding, a book…

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: Given the firm’s stock price of $20/share and 10,000 shares outstanding along with Net Income of…

A: Market Value Multiple = Market Value/ Net Income Market Value = No. of shares * Shares outstanding

Q: North Side Corp’s dividends for year 1, year 2, year 3, and expected share price for year 3 are:…

A: Current price of share is referred as the most recent selling price of a stock which is traded on an…

Q: Given the following partial stock quote, what was the net income for ABC Co. for the most recent…

A: Click to see the answer

Q: Consider the following data: Common stock ($1 par value): $400,000 Capital surplus: $900,000…

A: Click to see the answer

Q: If Salalah Energy Services is issuing preferred stock at 210 per share, with a stated dividend of…

A: Cost of preferred stock refers to the cost of issuing the preference shares. Cost of preferred stock…

Q: Gamma Industries has net income of $3,800,000, and it has1,490,000 shares of common stock…

A: Given information: Net income is $3,800,000 Number of shares outstanding are 1,490,000 Current stock…

Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…

A: Income statement: Under this Statement showing the company’s performance over a period of time by…

Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: If Salalah Energy Services is issuing preferred stock at 210 per share, with a stated dividend of…

A: Cost of preferred stock means the percentage cost that company has to bear in form of dividend for…

Q: If the company’s Earnings available to equity shareholders are OMR 60,000, its cost of equity is 8%…

A: Value of equity shares under Net Income approach is calculated by dividing the earnings available to…

Q: Mayo Inc.'s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual…

A: The cost of preferred shares is determined by the dividends paid by the company as return for the…

Q: Am I correct in my calculations: Suppose that in July​ 2013, Nike Inc. had EPS of $2.28 and a book…

A: Checking your Caluclations

Q: Shares in Elon Must Inc. are currently trading at a forward P/D (price-to-dividend) ratio of 50, a…

A: Assume dividend to be 1 Price = 50 E = 1.25 B = 5/3 Return on Equity = 1.25/5/3 = 75% g = 75%…

Q: Suppose a stock had an initial price of $103 per share, paid a dividend of $2.55 per share during…

A: Total return % = (Capital gain + dividend) / Initial price

Q: West Wind, Inc. has 4,900,000 shares of common stock outstanding with a market value of $75 per…

A: EPS = net income /no of shares outstanding therefore EPS before share split = 6600000/4900000…

Q: You are given the following information: Stockholders’ equity !$3.75 billion, price/earnings ratio !…

A: Given that:Stockholders’ equity (in balance sheet) is $3.75 billion or $3750 MillionCommon shares…

Q: The following information have been taken from the X Company Dividends paid on preferred stock…

A: Market Price per share = 30 Net Income before taxes = 150 Income tax = 30% Number of shares of…

Q: The preferred stock of Axim Corp. is currently selling at $51.07. If the required rate of return is…

A: Answer  Current price = $51.07 required rate of return = 11.7%

Q: Consider the following data:                                                     Amount ($) Common…

A: Number of Common Stock ($400000 / $1) 400000   Stock Dividend (400000  shares * 10%) 40000…

Q: The price-earnings ratio of a stock is given by R(P,E)=P/E where P is the price of the stock and E…

A: A ratio that provides information regarding the share price of a company by relating it to the…

Q: A stock had an initial price of GH¢5,000 per share, paid a dividend of GH¢1,000 per share at the end…

A: A stock is a security that represents the ownership of a fraction of a company.

Q: The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $0.55 per share, and…

A: Part a: Number of shares outstanding = 16,000 Value of Equity = $1,120,000 Price of share = Value of…

Q: The income statement of Blue Co. in 2021 shows a net Income of P2,400,000. It is the policy of the…

A: Given: Cash dividend = P5 Current market price = P25

Q: The market value balance sheet for MZ Toys reflects cash of $32,000, fixed assets of $687,000, debt…

A: Dividend is the part of profit that is distributed among the shareholders. The ex-dividend is the…

Q: What is the yield on a share of preferred stock, which has a $100 par value and is currently selling…

A: Annual Dividend = $100 *14% = $14

Q: what is the yield on a share of preferred stock, which has a $100 par value and is currently selling…

A: Given information: Par value of preferred stock is $100 Current price of stock is $140 Annual…

Q: The table that follows shows the stock price, earnings per share, and dividends per share for three…

A: Price earnings ratio is the amount the investor ready to invest to earn one dollar from the company.…

Q: Quest Financial services balance sheets report $200 million in total debt, $100 million in…

A: Given:

Q: A company’s preferred stock currently trades at $80 per share and pays a $6 annualdividend per…

A: Computation of cost of preferred stock:

Knowledge Booster
Finance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
  • Personal Finance
    Finance
    ISBN:9781337669214
    Author:GARMAN
    Publisher:Cengage
    Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
  • Corporate Fin Focused Approach
    Finance
    ISBN:9781285660516
    Author:EHRHARDT
    Publisher:Cengage
    Financial Accounting
    Accounting
    ISBN:9781337272124
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    Financial Management: Theory & Practice
    Finance
    ISBN:9781337909730
    Author:Brigham
    Publisher:Cengage
  • Personal Finance
    Finance
    ISBN:9781337669214
    Author:GARMAN
    Publisher:Cengage
    Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
    Corporate Fin Focused Approach
    Finance
    ISBN:9781285660516
    Author:EHRHARDT
    Publisher:Cengage
    Financial Accounting
    Accounting
    ISBN:9781337272124
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    Financial Management: Theory & Practice
    Finance
    ISBN:9781337909730
    Author:Brigham
    Publisher:Cengage