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inna [77]
2 years ago
8

Cold Goose Metal Works Inc. just reported earnings after tax (also called net income) of $8,000,000 and a current stock price of

$14.75 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 to 7,000,000). If Cold Goose's forecasr turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now?
Business
1 answer:
Harrizon [31]2 years ago
8 0

Answer:

$14.49

Explanation:

Present P/E ratio = Current stock price/(Net income/Shares outstanding)

Present P/E ratio = 14.75/($8,000,000/5,500,000 shares)

Present P/E ratio = 10.1406

EPS after 1 year = 8000000*125%/ 7000000

EPS after 1 year = 1.4286

Stock price = EPS after 1 year * Present P/E ratio

Stock price= 1.4286* 10.1406

Stock price = $14.49

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Answer:

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I hope my answer helps you

4 0
3 years ago
Define what is meant by the phrase "planning materiality threshold"
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3 years ago
Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?
Vsevolod [243]

According to economic principles, as prices fall, quantity demanded goes up.

What is equilibrium price?

The market price at which the amount of goods supplied and the amount of goods sought are equal is referred to as the "equilibrium price."

The demand and supply model's reasoning is straightforward. For instance, when sugar prices are lower, the market's demand is automatically increased.

Excess demand is depicted in the graph. The price is less than the equilibrium price, as shown by p2 on the graph, since as the price decreases, the quantity demanded increases.

As a result, option (a) As prices fall, quantity demanded goes up is correct.

Learn more about on equilibrium price, here:  

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n the money creation process, the simple money multiplier assumes that banks hold no excess reserves. What is the consequence of
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