Answer:
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Answer:
$5.952
Explanation:
For the computation of expected price of the competitor's stock first we need to find out the P/E ratio of a firm which is shown below:-
P/E ratio of a firm = Stock price ÷ Earning per share
= $14.26 ÷ $1.15
= $12.4
Price of competitor's stock = P/E ratio of a firm × Earning per share
= $12.4 × $0.48
= $5.952
Therefore for computing the expected price of the competitor's stock we simply applied the above formula.