Question

New York Times Co. (NYT) recently earned a profit of $2.21 per share and has a P/E ratio of 19.70. The dividend has been growing at a 6.75 percent rate over the past six years. If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 21 in five years?

Answer 1

The answers are given below;

Step-by-step explanation:

1.P/E Ratio=Price /EPS

19.7=Price/(2.21)^5

Price=52.7*19.7=$1,038

2. 21=Price/(2.21)^5

Price=21*52.7=$1,107