Assume that a firm's earnings per share (EPS)are expected to be $1.35 next year and that analysts have determined that an appropriate forward-looking multiple is 20 times the projected earnings.What should the stock price be?
A)$11.35
B)$20.00
C)$27.00
D)$28.75

Question

Quizplus · Accepted Answer

To calculate the stock price, we multiply the projected EPS by the forward-looking multiple: 
$1.35 x 20 = $27.00. 
Therefore, the answer is C) $27.00.

Assume That a Firm's Earnings Per Share (EPS)are Expected to Be