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Dvinal [7]
1 year ago
12

Company XYZ closed at ​$46.07 per share with a​ P/E ratio of 16.66. Answer the following questions.

Mathematics
1 answer:
Andrew [12]1 year ago
8 0

The amount of  earnings per share is $2.77.

<h3>Earnings per share</h3>

a. Earnings per share = price per share / (P/E) ratio

Earnings per share =   ​$46.07 / 16.66

Earnings per share=  $2.77

B. Overpriced or underpriced stock

At P/E ratio = 12

Earnings per share = ​$46.07  / 12

Earnings per share = $3.84

Earning yield = ( Earning per share / market value )× 100

Earning yield =  (3.84 /  ​$46.07   ) × 100

Earning yield  = 8.34%

At P/E ratio = 13

Earnings per share = ​$46.07  / 13

Earnings per share = $3.54

Earning Yield= (3.54 / 46.07 ) × 100

Earning Yield= 7.68%

At P/E ratio = 14

Earnings per share = ​$46.07 / 14

Earnings per share = $ 3.3

Earnings yield= ( 3.3 / 46.07 )×100

Earnings yield= 7.16%

Average of  earning yield given P/E ratio is 12-14

Average of  earning yield= ( 8.34 + 7.68 + 7.16 ) / 3

Average of  earning yield= 7.73%

Earning yield =  ( Earning per share / market value ) × 100

Earning yield= ( 2.77 / 46.07 ) ×100

Earning yield = 6.01%

Hence, Based on the above the stock is underpriced.

Learn more about earning per share here:brainly.com/question/18372069

#SPJ1

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