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

question 95

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

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Definitions:

FMV

Fair Market Value, the price at which a property would sell under normal conditions.

Basis

The amount of investment in property for tax purposes, used to calculate gain or loss on the sale, exchange, or other disposition of the property.

Cash Distribution

Cash Distribution is the payment of funds from a corporation or a financial institution to a shareholder or account holder, often from profits or interest earnings.

Partnership Interest

The share or portion of a partnership's profits and losses that is attributed to each partner.