Electronics Galore has historically had a P/E ratio of 23.4.This ratio is considered a good estimate of the future ratio.The firm currently has EPS of $1.68.These earnings are expected to increase by 4.2 percent next year.What is the expected price of this stock one year from now?
A)$39.31
B)$40.96
C)$41.25
D)$42.78
E)$43.79

Question

Quizplus · Accepted Answer

Expected price = $1.68 × (1 + .042) × 23.4 = $40.96

Electronics Galore Has Historically Had a P/E Ratio of 23