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: High price Low price EPS Year 1 $ 87.06 Year 2 $ 98.34 Year 3 $119.70 Year 4 $131.53 69.28 6.51 81.90 81.58 108.56 8.93 8.59 10.18 Earnings are expected to grow at 8.5 percent over the next year. a. What is the high target stock price over the next year? Note: 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? Note: 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
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: High price Low price EPS Year 1 $ 87.06 Year 2 $ 98.34 Year 3 $119.70 Year 4 $131.53 69.28 6.51 81.90 81.58 108.56 8.93 8.59 10.18 Earnings are expected to grow at 8.5 percent over the next year. a. What is the high target stock price over the next year? Note: 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? Note: 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
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
Problem 1PS
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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:
High price
Low price
EPS
Year 1
$ 87.06
Year 2
$ 98.34
Year 3
$119.70
Year 4
$131.53
69.28
6.51
81.90
81.58
108.56
8.93
8.59
10.18
Earnings are expected to grow at 8.5 percent over the next year.
a. What is the high target stock price over the next year?
Note: 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?
Note: 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
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