value: 7.00 points If you look at stock prices over any year, you will find a hi
ID: 2750598 • Letter: V
Question
value: 7.00 points 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: Year Year 1 Year 2 Year 3 $88.22 $101.02 $122.62 $134.29 High price Low price 70.04 83.62 79.46 110.72 EPS 6.55 8.97 8.63 10.22 Earnings are expected to grow at 6 percent for the next year. Required: What are the high and low PE ratios for each year? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16). High PE Low PE Year 1 Year 2 Year 3 Year 4 What are the average high and lo PE ratios over this period? (Do not round intermediate calculations Round your answers to 2 decimal places (e.g., 32.16).) High PE Low PE Average What is the high target stock price in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) High target price What is the low target stock price in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Low target price eBook & Resources References Worksheet Difficulty: Intermediate Learning Objective: 07-02 Identify the different ways corporate directors are elected to office Check my workExplanation / Answer
[(10.22*1.06)*13.02]
= 141.05
[(10.22*1.06)*10.01]
= 108.44
Particulars Year-1 Year-2 Year-3 Year-4 High Price 88.22 101.02 122.62 134.29 EPS 6.55 8.97 8.63 10.22 High P/E ratio 13.47 11.26 14.21 13.13 Avg High P/E ratio 13.02 High Target Stock Price in one Year[(10.22*1.06)*13.02]
= 141.05
Low Price 70.04 83.62 79.46 110.72 EPS 6.55 8.97 8.63 10.22 Low P/E ratio 10.69 9.32 9.21 10.83 Avg Low P/E Ratio 10.01 Low Target Stock Price in one Year[(10.22*1.06)*10.01]
= 108.44
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