Final answer:
The appropriate stock price for the Dahlia Flower Company, given an EPS of $1.40 and a benchmark PE ratio of 15, is calculated to be $21.00 per share.
Step-by-step explanation:
The student is asking about stock valuation, specifically how to determine an appropriate stock price given earnings per share (EPS) and a benchmark price-to-earnings (PE) ratio. The formula for calculating the stock price from these variables is straightforward: it is the EPS multiplied by the PE ratio. In this case, the Dahlia Flower Company has earnings of $1.40 per share and a benchmark PE of 15. Thus, the appropriate stock price would be:
Stock Price = EPS × PE
= $1.40 × 15
= $21.00 per share.
This would be considered an appropriate stock price for the Dahlia Flower Company based on its earnings and the benchmark PE ratio.