A fertilizer manufacturing company has anindustry average P/E ratio of 20. Thecompany's earnings per share (EPS) areprojected to be $6.50.What should be the company's share pricebased on the industry P/E ratio?

Given:P/E ratio = 20EPS = $6.50 Formula:Share price = P/E ratio * EPSShare price = 20 * 6.5…

Answered: A fertilizer manufacturing company has…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter9: Stocks And Their Valuation

Section: Chapter Questions

Problem 3TCL

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A fertilizer manufacturing company has an industry average P/E ratio of 20. The company's earnings per share (EPS) are projected to be $6.50. What should be the company's share price based on the industry P/E ratio?