Exhibit 9-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 58

Multiple Choice

Exhibit 9-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Modular Industries currently has a 16% annual growth rate while the market average is 6%. The market multiple is 10.
-Refer to Exhibit 9-2. Determine the P/E ratio for Modular Industries assuming Modular can maintain its superior growth rate for the next 8 years.

• A) 6.4
• B) 20.5
• C) 16.5
• D) 23.8
• E) 29.5

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Definitions:

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in non-cash accounts to reveal net cash from operating activities.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activity into operating, investing, and financing activities.

Operating Activities

Transactions and events that relate to the primary operations of the company, including revenue and expense activities.

Fully Depreciated

A state where an asset has reached the end of its useful life for accounting purposes, with its cost fully allocated to depreciation expense over its useful life.