Question

The Blooming Flower Co. has earnings of $1.43 per share. a. If the benchmark PE for the company is 12, how much will you pay for the stock

Answer 1

Answer: One can pay $17.16 for stock

Step-by-step explanation:

Stock price is referred to as The current market price which is the amount one can buy a share in a company. The P/E ratio gives investors the idea of what to expect in the current price at market level and amount to pay for current earnings per share.

PE (Price Earning ratio ) = Share Price/Stock Price per share / Earnings per Share

Therefore Price of Share = Earnings per Share x PE (Price Earning ratio )

= $1.43 x 12

$17.16