Same company as in RA 5.3: Stock price of $42, earnings of $2.12 per share during the last twelve months, forecasted earnings of

Question

3 years ago

7

Same company as in RA 5.3: Stock price of $42, earnings of $2.12 per share during the last twelve months, forecasted earnings of

$2.84 over the following year, and average earnings growth forecast of 12.5% per year for the next five years. What is this stock's Forward P/E ratio, rounded to one decimal place

Business

1 answer:

luda_lava [24] · Answer 1 · 2022-02-09T17:57:03+03:00

Answer:

P/E ratio = $14.78

Explanation:

Market value per share = $42

earning per share = $ 2.84

As we know that:

Price earning ratio = market value per share / earning per share

= $42 / 2.84

= $14.78

Price earning ratio is an indicator to investor whether to invest in this company long term or not.