P/E AND STOCK PRICE Fontaine Inc. recently reported net income of $2 million. It has 500,000 shares of common stock, which currently trades at $40 a share. Fontaine continues to expand and anticipates that 1 year from now, its net income will be $3.25 million. Over the next year, it also anticipates issuing an additional 150,000 shares of stock so that 1 year from now it will have 650,000 shares of common stock. Assuming Fontaine’s price/earnings ratio remains at its current level, what will be its stock price 1 year from now?
Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
Solutions
P/E AND STOCK PRICE Fontaine Inc. recently reported net income of $2 million. It has 500,000 shares of common stock, which currently trades at $40 a share. Fontaine continues to expand and anticipates that 1 year from now, its net income will be $3.25 million. Over the next year, it also anticipates issuing an additional 150,000 shares of stock so that 1 year from now it will have 650,000 shares of common stock. Assuming Fontaine’s price/earnings ratio remains at its current level, what will be its stock price 1 year from now?
Expert Solution
Chapter 4 Solutions
Additional Business Textbook Solutions
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Accounting Information Systems
Financial & Managerial Accounting
Foundations of Business (MindTap Course List)
Contemporary Marketing
Essentials of Economics (MindTap Course List)
College Accounting (Book Only): A Career Approach
Statistics for Business & Economics, Revised (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Principles of Economics (MindTap Course List)
College Accounting (Book Only): A Career Approach
Financial And Managerial Accounting
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Principles of Microeconomics (MindTap Course List)
Exploring Economics
Management, Loose-Leaf Version
Financial & Managerial Accounting
Principles of Macroeconomics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Accounting (Text Only)
Accounting Information Systems
Managerial Accounting: The Cornerstone of Business Decision-Making
Financial Accounting
Corporate Financial Accounting
Essentials of Business Communication (MindTap Course List)
Financial Accounting
MKTG 12:STUDENT ED.-TEXT
Intermediate Accounting: Reporting And Analysis
College Accounting, Chapters 1-27
Pkg Acc Infor Systems MS VISIO CD
Principles of Macroeconomics (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Practical Management Science
Microeconomics
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Macroeconomics
Purchasing and Supply Chain Management
Economics (MindTap Course List)
Cornerstones of Cost Management (Cornerstones Series)
Survey of Accounting (Accounting I)
Economics For Today
Corporate Financial Accounting
Principles of Microeconomics
MACROECONOMICS FOR TODAY
Microeconomics: Private and Public Choice (MindTap Course List)
Micro Economics For Today
Managerial Accounting
Macroeconomics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)
Cornerstones of Financial Accounting
