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

question 10

Multiple Choice

Suppose that the average P/E multiple in the oil industry is 16. Shell Oil is expected to have an EPS of $4.50 in the coming year. The intrinsic value of Shell Oil stock should be

• A) $28.12.
• B) $35.55.
• C) $63.00.
• D) $72.00.
• E) None of the options are correct.

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