a. What is the high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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If you look at stock prices over any year, you will find a high and low stock price for the
year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for
each year. We can use these ratios to calculate a high and a low stock price for the next
year. Suppose we have the following information on a particular company:
Year 1
Year 2
Year 3
Year 4
High
$87.93
$100.35
$121.89
$133.60
Low price
69.85
83.19
79.99
110.18
EPS
6.54
8.96
8.62
10.21
Earnings are expected to grow at 5.5 percent over the next year.
a. What is the high target stock price over the next year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the low target stock price over the next year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
a.
High target price
b. Low target price
price
Transcribed Image Text:If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company: Year 1 Year 2 Year 3 Year 4 High $87.93 $100.35 $121.89 $133.60 Low price 69.85 83.19 79.99 110.18 EPS 6.54 8.96 8.62 10.21 Earnings are expected to grow at 5.5 percent over the next year. a. What is the high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target price b. Low target price price
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