Question

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 over the past four years:

	Year 1				Year 2				Year 3				Year 4
High price	$	99.60			$	123.20			$	132.60			$	149.23
Low price		74.43				90.54				71.22				117.75
EPS		8.88				10.63				11.71				13.10

  

Earnings are projected to grow at 8 percent over the next year.

What is your 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.)

High target stock price

$

What is your 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.)

Low target stock price

Answer 1