Exhibit 14.2 Use the Information Below for the Following Problem(S)

question 76

Multiple Choice

Exhibit 14.2
Use the Information Below for the Following Problem(S)
Modular Industries currently has a 16% annual growth rate while the market average is 6 percent. The market multiple is 10.
-Refer to Exhibit 14.2.Determine the P/E ratio for Modular Industries assuming Modular can maintain its superior growth rate for the next 8 years.

• A) 6.4
• B) 20.5
• C) 16.5
• D) 23.8
• E) 29.5

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Definitions:

Profit-maximizing

The process or strategy by which a firm determines the price and output level that leads to the maximum profit.

Labor Demand

The total quantity of labor that employers want to hire at a given wage rate.

Labor Supply

Refers to the total hours that workers are willing and able to work at a given wage rate in a specific period.

Profit-maximize

A strategy where a firm makes decisions intended to achieve the highest possible profit.