The Current Price of DEF Corporation Stock Is $26

question 125

Multiple Choice

The current price of DEF Corporation stock is $26.50 per share. Earnings next year should be $2 per share and it should pay a $1 dividend. The P/E multiple is 15 times on average. What price would you expect for DEF's stock in the future?

• A) $26.50
• B) $13.50
• C) $15.00
• D) $30.00

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Definitions:

Factory Overhead

The total of all the indirect costs associated with manufacturing, not including direct labor or direct materials.

Applied to Production

Pertaining to costs or accounting methodologies directly associated with the manufacturing or creation process of goods or services.

Work in Process Inventory

Goods partially completed but not yet ready for sale, particularly in manufacturing, representing an ongoing production stage.

Direct Materials

Basic substances that are specifically identifiable in the creation of a particular product.