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ohaa [14]
3 years ago
6

Due to growing demand for computer software, the Shine Company has had a very successful year and expects its earnings per share

to grow by 25 percent to reach $5.50 for this year. Estimate the price of the company's common stock assuming the industry's price/earning ratio is 12. A. $66 B. $21.80 C. $45.80 D. $65
Business
1 answer:
suter [353]3 years ago
3 0

Answer:

A. $66

Explanation:

The price of the company's common stock can be determined by multiplying the industry's price/earning ratio by the earnings per share. If the price/earning ratio is 12, and earnings per share are $5.50, the stock price is:

P=12*\$5.50\\P=\$66

Therefore, the answer is alternative A. $66.

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