Register
Perine, Inc., has balance sheet equity of $6.8 million. At the same time, the income statement shows net income of $815,000. The company paid dividends of $285,000 and has 245,000 shares of stock outstanding.
165k views
1 vote
Perine, Inc., has balance sheet equity of $6.8 million. At the same time, the income statement shows net income of $815,000. The company paid dividends of $285,000 and has 245,000 shares of stock outstanding. If the benchmark PE ratio is 16, what is the target stock price in one year

User Zachary Nagler
by
5.4k points

1 Answer

4 votes

Answer:

Share price = $53.22

Step-by-step explanation:

The price of a share can determined using the price-earning ratio.

The ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potential for growth.

Price of stock = Earnings per share (EPS) × comparative P/E ratio

Using this model, the price is determined as follows:

EPS = Net Income/No of shares

EPS = 815,000/245,000

= 3.326530612

Share price = 3.326530612 × 16 = 53.22

Share price = $53.22

User Rhys Bradbury
by
5.3k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.7m questions

7.4m answers

Other Questions

_____ reminds customers and clients that they made a good choice in selecting a company with which to do business, or it reminds them of the good qualities of their purchase.​
On august 1 the darius co. purchased a photocopy machine for $8,000. the estimated annual depreciation on the machine is $1,680. if the company prepares annual financial statements on december 31, the
When president obama was elected, the u.s. economy was in trouble, and has slid into a recession. consumer spending was low and getting worse. in an effort to stop the decline, president obama proposed
Ensuring that an individual is who they claim to be is the function of _____. select one: a. confidentiality b. authorization c. availability d. authentication e. nonrepudiation
The current market price for good y is above the equilibrium price, and then the price of a subsitute good, x, increases. the demand curve for good y shifts as a result. what is the likely outcome of the
Link Copied!