A Company Is Expected to Generate $175,000 in Earnings Next

question 24

Multiple Choice

A company is expected to generate $175,000 in earnings next period and requires a 20% return on equity capital.Using the assumptions of the price-earnings ratio,what would be the company's value at the beginning of next period?

• A) $781,250
• B) $1,250,000
• C) $2,000,000
• D) $875,000

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Definitions:

Basil I

The founder of the Macedonian dynasty of the Byzantine Empire, reigning from 867 to 886, noted for administrative, financial, and military reforms.

Byzantine Empire

The eastern continuation of the Roman Empire after the fall of the Western Roman Empire, noted for its rich culture and contributions to art, architecture, and law.

Saint Mark

One of the four Evangelists in Christian tradition, traditionally regarded as the author of the second Gospel in the New Testament.

Venice

A historic city in Italy, famous for its canals, architecture, and rich cultural heritage, often referenced in art and literature.