Electronics Galore Has Historically Had a P/E Ratio of 22

question 78

Multiple Choice

Electronics Galore has historically had a P/E ratio of 22.1. This ratio is considered a good estimate of the future ratio. The firm currently has EPS of $1.78. These earnings are expected to increase by 5.0 percent next year. What is the expected price of this stock one year from now?

• A)$39.31
• B)$40.96
• C)$41.30
• D)$42.78
• E)$43.79

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Definitions:

Transferable Shares

Shares of a company's stock that can be sold or transferred by the shareholder to another party without restrictions.

Partners

Individuals or entities engaged in business together under a formal agreement to share profits and losses.

Co-own

To have joint ownership or share the possession of a property or item with one or more parties.

Voluntary Association

An organization created by individuals who voluntarily unite to pursue a common interest or goal without necessarily seeking profit.