Question

Qualcomm (QCOM) is expected to generate annual earnings per share of $3.70 and is currently trading for $62.64. Assuming that investors require a return of 13% for QCOM stock, what is the approximate fractional amount of the current stock price reflected in PVGO

Answer 1

Answer: 0.55

Step-by-step explanation:

Based on the information given, the approximate fractional amount of the current stock price reflected in PVGO will be calculated thus;

Earning per share, EPS = $3.70

Price per share, P= $62.64

Rate of return, k = 13%

Therefore,

PVGO = Price per share - (Earnings per share/Rate of return)

PVGO = P-EPS/k

= 62.64 - 3.70/13%

= 62.64- 28.46

= $34.18

Since it's to be represented as a fraction, this Will be:

= 34.18/62.64

= 0.55