The current price of DEF Corporation stock is $26.50 per share. Earnings next year should be $2 per share and it should pay a $1 dividend. The P/E multiple is 15 times on average. What price would you expect for DEF's stock in the future?

Question

Quizplus · Accepted Answer

To calculate the future stock price using the P/E multiple:
Future stock price = (Expected earnings per share x P/E multiple) + Expected dividend per share
= ($2 x 15) + $1
= $31
Therefore, the closest answer choice is D: $30.00.

The Current Price of DEF Corporation Stock Is $26