Gnomes R Us just paid a dividend of $1.90 per share. The company has a dividend payout ratio of 25 percent. If the PE ratio is 1 6.9 times, what is the stock price
1 answer:
Answer:
Stock price=$128.44
Explanation:
Calculation for stock price
First step is to calculate for dividend payout ratio using this formula
Dividend payout ratio=Dividend payout/Earnings
Let plug in the formula
Earnings=($1.90/0.25)
Earnings=$7.6
Now let calculate for PE ratio using this formula
PE ratio=Stock price/EPS
Let plug in the formula
Stock price=$7.6*16.9times
Stock price=$128.44
Therefore Stock price will be $128.44
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