Answer:
42.5
Explanation:
The computation of the expected value is shown below:
= Low price range × chance percentage + high price range × chance percentage + most likely price range × chance percentage
= $5 billion × 20% + $100 billion × 10% + $45 billion × 70%
= $1 + $10 + $31.5
= 42.5
Basically we multiplied each one with its chance percentage
Answer:
<u>Question 1:</u>
What would be the stock price in five years if the P/E ratio remained unchanged?
Answer: $161.30
<u>Question 2:</u>
What would the price be if the P/E ratio increased to 18 in five years?
Answer: $175.96
Explanation:
Question 1:
<u>What would be the stock price in five years if the P/E ratio remained unchanged?</u>
Solution:
PV = $6.07
I = 10%
PMT = 0
N = 5
CPT FV = PV×(1+1/Y)^N
CPT FV = $6.07 × (1+0.10)^5
CPT FV = $9.78
Stock price in five years = $9.78×16.5 = $161.30 (answer)
<u>Question 2:</u>
<u>What would the price be if the P/E ratio increased to 18 in five years?</u>
CPT FV = $9.78
Price = CPT FV × 18
Price = $9.78 × 18
Price = $175.96 (answer)
Answer:
false
Explanation:
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