Please need answer the accounting question Last year, Rec Room Sports reported earnings per share of $8.40when its stock price was $201.60. This year, its earnings increasedby 25%.If the P/E ratio remains constant, what is likely to be the price ofthe stock?

Step 1: Define P/E ratioP/E ratio is also known as the price-earnings ratio. It is computed by…

Answered: Last year, Rec Room Sports reported…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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Last year, Rec Room Sports reported earnings per share of $8.40 when its stock price was $201.60. This year, its earnings increased by 25%. If the P/E ratio remains constant, what is likely to be the price of the stock?