USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 87

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Modular Industries currently has a 16 percent annual growth rate, while the market average is 6 percent. The market multiple is 10.
-Refer to Exhibit 9.11. Determine the justified P/E ratio for Modular Industries assuming Modular can maintain its superior growth rate for the next five years.

• A) 6.4
• B) 13.1
• C) 16.5
• D) 23.8
• E) 15.7

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Definitions:

Net Sales

The revenue generated from goods or services sold by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Beginning Inventory

The value of stock on hand at the start of an accounting period, before any purchases or sales are made.

Cost of Goods Sold

The total cost of manufacturing or acquiring the products sold by a company during a specific period.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, prior to any purchases or sales being recorded.