The Blooming Flower Co. has earnings of $3.68 per share.

a. If the benchmark PE for the company is 18, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b. If the benchmark PE for the company is 21, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

Q1)

This sum is based on the price earning (PE) ratio; where earning per share (EPS) is $3.68.

PE ratio = Stock price / EPS

18 = Stock price / 3.68

18 × 3.68 = Stock price

Stock price = $ 66.24 (Answer)

PE ratio = Stock price / EPS

21 = Stock price / 3.68

21 × 3.68 = Stock price

Stock price = $ 77.28 (Answer)

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

The Sleeping Flower Co. has earnings of $4.64 per share. The benchmark PE for the company...

The Sleeping Flower Co. has earnings of $4.64 per share. The benchmark PE for the company is 24.12. What stock price would you consider appropriate? (Round answer to two decimals, i.e. 32.16)

Question 19 Espanya Co. has a price-earnings ratio of 10, earnings per share of P2.20, and...

Question 19 Espanya Co. has a price-earnings ratio of 10, earnings per share of P2.20, and a payout ratio of 75%. The dividend yield is Group of answer choices 25.0% 7.5% 10.0% 22.0% Question 20 pts The following were reflected from the records of Mamita Company: EBIT P1,250,000 Interest expense 250,000 Preferred dividends 200,000 Payout ratio 40% Shares outstanding, 2020 Preferred 20,000 Common 25,000 Income tax rate 40% Price-earnings ratio 2 The dividend yield ratio is Group of answer choices...

Fun Toys Co. reported a per-share book value of $3.5, earnings per share (EPS) of $2.3,...

Fun Toys Co. reported a per-share book value of $3.5, earnings per share (EPS) of $2.3, and dividend per share (DPS) of 0.85 in its balance sheet on December 31, 2010. In early 2011 analysts made the following forecasts for 2011~2015: EPS growth rate is 4.5%, and DPS growth rate is 2%. The required return for equity is 8.5% percent. Case 1: If the residual earnings are zero after 2015, calculate the value per share at the end of 2010....

Sankey Co. has earnings per share of $3.60. The benchmark PE is 18.1 times. What stock...

Sankey Co. has earnings per share of $3.60. The benchmark PE is 18.1 times. What stock price would you consider appropriate?

The following information is relevant to the computation of Charlie Co.’s earnings per share to be...

The following information is relevant to the computation of Charlie Co.’s earnings per share to be disclosed on Charlie’s income statement for the year ending December 31, 2020:  2020 net income: $800,000  Common shares activity in 2020: o Shares outstanding at January 1, 2020: 600,000 o Shares issued on May 1, 2020: 24,000 o Treasury shares purchased on July 31, 2020: 60,000  $5,000,000 face value, 2% 10-year convertible bonds were outstanding on January 1, 2020. Each $1,000...

Julie's Market Place has earnings per share of $.35, a book value of $2.10 per share,...

Julie's Market Place has earnings per share of $.35, a book value of $2.10 per share, and a market-to-book ratio of 3. What is the firm's price-earnings ratio?

1/ A company has earnings per share of $9.40. Its dividend per share is $1.15, its...

1/ A company has earnings per share of $9.40. Its dividend per share is $1.15, its market price per share is $115.62, and its book value per share is $92. Its price-earnings ratio equals: Multiple Choice 9.40. 9.79. 8.17. 8.30. 12.30. 2/ A company issues 6%, 4-year bonds with a par value of $200,000 on January 1 at a price of $207,170, when the market rate of interest was 5%. The bonds pay interest semiannually. The amount of each semiannual...

what was the earnings per common share

Net Income for the period totaled OMR75,000,preferred dividends paid totaled OMR10,000 and common dividends paid totaled OMR30,000.If there 100,000 common shares outstanding throughout the year.What was the earnings per common share (a)44.50 OMR (b)0.35 OMR (c)0.65 OMR (d) 4.50 OMR

Bill's Bakery has current earnings per share of $2.98. Current book value is $4.90 per share....

Bill's Bakery has current earnings per share of $2.98. Current book value is $4.90 per share. The appropriate discount rate for Bill's Bakery is 11 percent. Calculate the share price for Bill's Bakery if earnings grow at 3.8 percent forever. (Do not round intermediate calculations. Round your answer to 2 decimal places.) What is the share price

Earnings per Share, Extraordinary Item The net income reported on the income statement of Goth Co....

Earnings per Share, Extraordinary Item The net income reported on the income statement of Goth Co. was $2,340,000. There were 100,000 shares of $23 par common stock and 40,000 shares of $6 preferred stock outstanding throughout the current year. The income statement included two extraordinary items: a $470,000 gain from condemnation of land and a $180,000 loss arising from flood damage, both after applicable income tax. a. Determine the per-share figure for common stock for income before extraordinary items. Round...

Subjects