An Analyst Has Determined That the Intrinsic Value of IBM

question 102

Multiple Choice

An analyst has determined that the intrinsic value of IBM stock is $80 per share using the capitalized earnings model. If the typical P/E ratio in the computer industry is 22, then it would be reasonable to assume the expected EPS of IBM in the coming year is

• A) $3.64.
• B) $4.44.
• C) $14.40.
• D) $22.50.

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