Question
In: Finance
xyz'z eps for the current year is 2.25 and its current P/E ratio is 12. you...
xyz'z eps for the current year is 2.25 and its current P/E ratio is 12. you have forecasted that EPS will grow by 6% and the P/E will increase by 10%. What do you expect the price of a sharae of xyz's stock to be at the end of next year
Solutions
Expert Solution
Current year EPS = 2.25
Current P/E ratio = 12
Growth in EPS is 6% or 0.06
Expected EPS = Current EPS * (1 + Growth rate)
= $2.25 * (1+0.06)
= $2.25 * 1.06
= $2.385
Growth in PE ratio is 10% or 0.10
Expected P/E ratio = Current PE ratio* (1 + Growth rate)
= 12 * (1+0.10)
= 12 * 1.10
= 13.2
PE ratio = Price of share / EPS
13.2 = Price of share / $2.385
Price of share =13.2 * 2.385
= $31.482
The price at year end would be $31.482
jeff jeffy answered 2 years agoRelated Solutions
Fake Company Theta has EPS of 3.03, a current P/E ratio of 32.1, and a relative...
Fake Company Theta has EPS of 3.03, a current P/E ratio of 32.1,
and a relative P/E of 4.01. What is an estimate for the broad
market (such as S&P 500) P/E?
Corporation's EPS last year is $2.51, and its P/E is expected to stay at 21. Annual...
Corporation's EPS last year is $2.51, and its P/E is expected
to stay at 21. Annual earnings growth is expected to be6%.
Requirement 1:
What is your estimate of the current stock price? Hint: just
last year's EPS times P/E. (Do not round
intermediate calculations. Round your answer to 2
decimal places (e.g., 32.16).)
Stock price
$
Requirement 2:
What is the target stock price in one year? Hint: grow EPS for
one period and multiply by
P/E. (Do not round...
This year, Sooner Company reports a deficit in current E&P of ($362,000). Its accumulated E&P at...
This year, Sooner Company reports a deficit in current E&P
of ($362,000). Its accumulated E&P at the beginning of the year
was $270,000. Sooner distributed $540,000 to its sole shareholder,
Boomer Wells, on June 30 of this year. Boomer’s tax basis in his
Sooner stock before the distribution is $101,500. (Leave no
answer blank. Enter zero if applicable. Negative
amount should be indicated by a minus sign.)
a) How much of the $540,000 distribution is treated as a
dividend to...
This year, Sooner Company reports a deficit in current E&P of ($478,000). Its accumulated E&P at...
This year, Sooner Company reports a deficit in current E&P
of ($478,000). Its accumulated E&P at the beginning of the year
was $392,000. Sooner distributed $784,000 to its sole shareholder,
Boomer Wells, on June 30 of this year. Boomer’s tax basis in his
Sooner stock before the distribution is $120,000. (Leave no answer
blank. Enter zero if applicable. Negative amount should be
indicated by a minus sign.)
c. What is Sooner’s balance in accumulated E&P on the first
day of...
EPS, P/E Ratio, and Dividend Ratios The Stockholders' Equity section of the balance sheet for Obregon,...
EPS, P/E Ratio, and Dividend Ratios
The Stockholders' Equity section of the balance sheet for
Obregon, Inc. at the end of 2017 appears as follows:
8%, $100 par, cumulative preferred stock, 200,000
shares authorized, 50,000 shares issued and outstanding
$5,000,000
Additional paid-in capital on preferred
2,500,000
Common stock, $5 par, 500,000 shares authorized,
400,000 shares issued and outstanding
2,000,000
Additional paid-in capital on common
18,000,000
Retained earnings
37,500,000
Total stockholders' equity
$65,000,000
Net income for the year was $1,345,000. Dividends...
EPS, P/E Ratio, and Dividend Ratios The Stockholders' Equity section of the balance sheet for Obregon,...
EPS, P/E Ratio, and Dividend Ratios
The Stockholders' Equity section of the balance sheet for
Obregon, Inc. at the end of 2017 appears as follows:
8%, $100 par, cumulative preferred stock, 200,000
shares authorized, 50,000 shares issued and outstanding
$5,000,000
Additional paid-in capital on preferred
2,500,000
Common stock, $5 par, 500,000 shares authorized,
400,000 shares issued and outstanding
2,000,000
Additional paid-in capital on common
18,000,000
Retained earnings
37,500,000
Total stockholders' equity
$65,000,000
Net income for the year was $1,335,000. Dividends...
This year, Sooner Company reports current E&P of negative $426,000. Its accumulated E&P at the beginning...
This year, Sooner Company reports current E&P of negative
$426,000. Its accumulated E&P at the beginning of the year was
$264,000. Sooner distributed $528,000 to its sole shareholder,
Boomer Wells, on June 30 of this year. Boomer’s tax basis in his
Sooner stock is $124,500. (Leave no answer blank. Enter zero if
applicable. Negative amounts should be indicated by a minus
sign.)
a. How much of the $528,000 distribution is treated as a
dividend to Boomer? Dividend =
b. What...
This year, Sooner Company reports current E&P of negative $424,000. Its accumulated E&P at the beginning...
This year, Sooner Company reports current E&P of negative
$424,000. Its accumulated E&P at the beginning of the year was
$354,000. Sooner distributed $708,000 to its sole shareholder,
Boomer Wells, on June 30 of this year. Boomer’s tax basis in his
Sooner stock is $122,500.
a. How much of the $708,000 distribution is treated as a
dividend to Boomer?
Dividend $142,000
b. What is Boomer’s tax basis in his Sooner stock after the
distribution?
Tax basis $0
c. What is...
This year, Sooner Company reports current E&P of negative $478,000. Its accumulated E&P at the beginning...
This year, Sooner Company reports current E&P of negative
$478,000. Its accumulated E&P at the beginning of the year was
$392,000. Sooner distributed $784,000 to its sole shareholder,
Boomer Wells, on June 30 of this year. Boomer’s tax basis in his
Sooner stock is $120,000. (Leave no answer blank. Enter
zero if applicable. Negative amounts should be
indicated by a minus sign.)
a. How much of the $784,000 distribution is
treated as a dividend to Boomer?
b. What is Boomer’s...
This year, Sooner Company reports current E&P of negative $300,000. Its accumulated E&P at the beginning of the year was $200,000.
This year, Sooner Company reports current E&P of negative $300,000. Its accumulated E&P at the beginning of the year was $200,000. Sooner distributed $400,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock is $75,000. (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.)
a. How much of the $400,000 distribution is treated as a dividend to Boomer?
Dividend?
b. What is...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
- Decision Variables S T Minimize 1.8S + 2.20T Subject to: Potassium 5S + 8T >= 200...
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
ADVERTISEMENT