You Are Provided with the Following Information About Javier Corporation

question 4

Multiple Choice

You are provided with the following information about Javier Corporation. Sales for the year 2010 were $500,000, and the Net Profit Margin (NPM) was 15 percent. Analysts project sales to grow by 12 percent next year (that is 2011) . However, because of more competition, the NPM is expected to decline by 10 percent for the year 2010. The expected P/E multiple for the year 2011 is 22. The total number of shares outstanding is 20,000. Use the earnings multiplier model to calculate the expected price for Javier Corporation in the year 2011.

• A) $74.25
• B) $61.6
• C) $82.5
• D) $83.16
• E) $101.64

---

Definitions:

Production Function

A production function is an equation that relates the quantity of output produced to the quantities of inputs used in production.

Factors Of Production

The inputs or resources that are used in the process of producing goods and services, typically including labor, capital, land, and entrepreneurship.

Input

The resources, materials, or labor used in the production of goods and services.

Output

In economics, output refers to the total amount of goods and services produced by a company, sector, or economy within a certain period of time.