The GAP's most recent earnings per share were $1.75. Analysts forecast next year's earnings per share at $1.88. If the appropriate P/E ratio is 15, a share of GAP stock should be valued at

Question

Quizplus · Accepted Answer

The value of a share of GAP stock, based on the forecasted earnings per share and the P/E ratio, is calculated by multiplying the forecasted earnings per share ($1.88) by the P/E ratio (15). This results in $1.88 * 15 = $28.20.

The GAP's Most Recent Earnings Per Share Were $1