The current earnings per share for Axaon Corp. stock is $0.21. If the P/E ratio of the company is 32 and earnings are expected to grow at 12.1 percent, what is the expected stock price in five years?

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Quizplus · Accepted Answer

To find the expected stock price in five years, first calculate the future earnings per share (EPS) using the growth rate: Future EPS = Current EPS * (1 + growth rate)^years = $0.21 * (1 + 0.121)^5 = $0.21 * 1.7623 ≈ $0.3701. Then, use the P/E ratio to find the stock price: Stock Price = Future EPS * P/E ratio = $0.3701 * 32 ≈ $11.90.

The Current Earnings Per Share for Axaon Corp