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I am not sure where, to begin with, this problem... "You have found the following historical information for...

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Finance

I am not sure where,to begin with, this problem...

"You have found thefollowing historical information for DEF Company:

                        Year1       Year2        Year3        Year 4

StockPrice       $46.29        $49.74         $54.55         $57.07

EPS                 $2.04 $2.9   $2.81    $3.78

Earnings are expectedto grow at 8 percent for the next year. Using the company'shistorical average PE as a benchmark, what is the target stockprice in one year?"

Answer & Explanation Solved by verified expert
4.4 Ratings (603 Votes)
Step1 Calculation of Average PriceEarnings Ratio PE Ratio PriceEarnings Ratio PE Ratio Current Stock Price Earnings per share PE Ratio Year 1 2269 Times 4629 204 per share PE    See Answer
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Transcribed Image Text

I am not sure where,to begin with, this problem..."You have found thefollowing historical information for DEF Company:                        Year1       Year2        Year3        Year 4StockPrice       $46.29        $49.74         $54.55         $57.07EPS                 $2.04 $2.9   $2.81    $3.78Earnings are expectedto grow at 8 percent for the next year. Using the company'shistorical average PE as a benchmark, what is the target stockprice in one year?"

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