FedEx Corporation (FDX) has a current share price of $157.83 and is expected to have earnings per share (EPS) next year of $12.58 per share. Analysts expect that FedEx's closest competitor, United Parcel Service, Inc. (UPS), will have earnings next year of $8.19 per share. FedEx's cost of capital is 11%. What is your current estimate of the value of one share of UPS stock using the method of comparables?

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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Question 17:
FedEx Corporation (FDX) has a current share price of $157.83 and is expected
to have earnings per share (EPS) next year of $12.58 per share. Analysts expect
that FedEx's closest competitor, United Parcel Service, Inc. (UPS), will have
earnings next year of $8.19 per share.
FedEx's cost of capital is 11%.
What is your current estimate of the value of one share of UPS stock using the
method of comparables?
O A. $74.45
O B. $242.43
O C. $102.75
O D. $12.55
O E. $153.44
O F. None of the above is withing $0.35 of the value of one share of UPS
stock.
Transcribed Image Text:FedEx Corporation (FDX) has a current share price of $157.83 and is expected to have earnings per share (EPS) next year of $12.58 per share. Analysts expect that FedEx's closest competitor, United Parcel Service, Inc. (UPS), will have earnings next year of $8.19 per share. FedEx's cost of capital is 11%. What is your current estimate of the value of one share of UPS stock using the method of comparables? O A. $74.45 O B. $242.43 O C. $102.75 O D. $12.55 O E. $153.44 O F. None of the above is withing $0.35 of the value of one share of UPS stock.
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