Apple stock is now selling for $315.32 per share.The P/E ratio based on current earnings is 23.72 and the P/E ratio based on expected earnings is 17.48.The expected growth rate in Apples earnings must be:

Question

Quizplus · Accepted Answer

The expected growth rate in earnings can be calculated using the formula: Expected Growth Rate = (P/E ratio based on expected earnings / P/E ratio based on current earnings) - 1. Substituting the given values: (17.48 / 23.72) - 1 = -0.263, which is approximately -26%. However, since the expected growth rate should be positive, the correct interpretation is that the expected earnings are 36% higher than current earnings, which corresponds to choice B.

Apple Stock Is Now Selling for $315