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A Company Is Expected to Generate $175,000 in Earnings Next

Question 18

Multiple Choice
A company is expected to generate $175,000 in earnings next period and requires a 20% return on equity capital.Using the assumptions of the price-earnings ratio,what would be the company's value at the beginning of next period?
A) $781,250
B) $1,250,000
C) $2,000,000
D) $875,000

A company is expected to generate $175,000 in earnings next period and requires a 20% return on equity capital.Using the assumptions of the price-earnings ratio,what would be the company's value at the beginning of next period?


A) $781,250
B) $1,250,000
C) $2,000,000
D) $875,000

Correct Answer:

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