A Company Is Expected to Generate $125,000 in Earnings Next

question 40

Multiple Choice

A company is expected to generate $125,000 in earnings next period and requires a 16 percent return on equity capital.Using the assumptions of the price-earnings ratio what would be the company's value at the beginning of next period?

• A) $781,250
• B) $1,250,000
• C) $2,000,000
• D) $125,000

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