A firm with a price-earnings ratio of 8.39 has earnings per share of $5.38. This firm...

Question

Question

A firm with a price-earnings ratio of 8.39 has earnings per share of $5.38. This firm will have an expected stock price closest to:

Group of answer choices

$42.93.

$43.38.

$44.16.

$45.14.

Answer 1

Answer #1

price-earnings ratio = Market price / Earnings per share

Earnings per share *price-earnings ratio = Market price

Market price = 8.39 * $ 5.38

= $45.1382

hence the correct answer is $ 45.14

Answer 2

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