Question

Sunset Corp. currently has an EPS of $2.21, and the benchmark PE for the company is 21. Earnings are expected to grow at 5 percent per year. a. What is your estimate of the current stock price

Answer 1

$46.41

Step-by-step explanation:

Sunset corporation has an EPS of $2.21

The benchmark PE is 21

The earnings are expected to grow at 5 % per year

Therefore the current stock price can be calculated as follows

= benchmark PE × earnings per share.

= 2.21 × 21

= $46.41

Hence the estimate of the current stock price is $46.41