Fabrizio, Inc. is expected to generate earnings of $1.50 per share this year. If the mean price-earnings ratio of competitors in the same industry is 20, then the valuation of Fabrizio's shares is $____.
A)13.33
B)3.00
C)20.00
D)30.00
E)None of these are correct.

Question

Quizplus · Accepted Answer

The valuation of Fabrizio's shares can be calculated by multiplying the earnings per share (EPS) by the mean price-earnings (P/E) ratio of competitors. Here, $1.50 EPS * 20 P/E ratio = $30.00 per share.