Exhibit 9-3 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 63

Multiple Choice

Exhibit 9-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Harcourt Industries currently has an 18% annual growth rate while the market average is 8%. The market multiple is 12.
-Refer to Exhibit 9-3. Determine the P/E ratio for Harcourt Industries assuming Harcourt can maintain its superior growth rate for the next 3 years.

• A) 4.25
• B) 12.50
• C) 15.67
• D) 30.10
• E) 42.80

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Definitions:

Compounded Annually

Interest on an investment that is calculated once per year, adding to the principal amount for future interest calculations.

Profit-Sharing

A company policy of distributing a portion of net profits among its employees as a form of incentive and reward.

Annual Profit

The financial gain or earnings of a business or individual for one full year after all expenses have been subtracted from total revenues.

Future Value

The estimated value of an investment at a specific date in the future, taking into account factors like interest rates or returns.