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The average industry price-earning (PE) ratio of firm F is 63. What is the current price of firm F's stock if earnings per share is projected to be 1.43?

a. 63
b. 44.06
c. 64.43
d. 90.09

1 Answer

5 votes

Final answer:

The current price of firm F's stock can be found by multiplying the PE ratio with the projected earnings per share (EPS). Using the given values of PE ratio as 63 and EPS as 1.43, the stock price is calculated to be $90.09 per share.

Step-by-step explanation:

The price of firm F's stock can be determined using the price-earning (PE) ratio and the projected earnings per share (EPS). The PE ratio is calculated by dividing the stock price by the EPS. In this case, the PE ratio is given as 63.

To find the stock price, we can rearrange the equation: Stock Price = PE ratio * EPS.

Substituting the given values, Stock Price = 63 * 1.43 = 90.09.

Therefore, the current price of firm F's stock is $90.09 per share. Hence, the correct answer is option d. 90.09.

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