Suppose That the Average P/E Multiple in the Gas Industry

question 34

Multiple Choice

Suppose that the average P/E multiple in the gas industry is 17. KMP is expected to have an EPS of $5.50 in the coming year. The intrinsic value of KMP stock should be

• A) $28.12.
• B) $93.50.
• C) $63.00.
• D) $72.00.
• E) None of the options are correct.

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Definitions:

Decision Making

The process of selecting a course of action from among multiple alternatives to achieve a desired outcome.

Research Reveal

The act of uncovering or disclosing findings or insights gained through systematic investigation.

Risky Decisions

Choices made under conditions of uncertainty that have potential negative consequences or involve significant risks.

Diffusion of Responsibility

A socio-psychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of others.