Early in 2013, Mathew Is Analyzing Shares of Janeff Corp

question 85

Multiple Choice

Early in 2013, Mathew is analyzing shares of Janeff Corp. He expects the following dividends per share (end of year) .
2013 $1.00
2014 $1.25
2015 $1.50
He expects 2015 earnings per share to be $4.50 and Janeff's P/E ratio to be 20. His required rate of return for this stock is 12%. He should pay no more than

• A) $43.75 per share.
• B) $67.02 per share.
• C) $68.75 per share.
• D) $93.75 per share.

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Definitions:

Gallons

This term refers to a unit of volume measurement, commonly used in the United States to measure liquids.

Fixed Manufacturing Overhead

The portion of total manufacturing overhead costs that do not vary with the level of production or output.

Work in Process

Inventory account containing goods that are in the manufacturing process but are not yet complete.

Standard Costs

Predetermined or budgeted costs used for cost control and decision-making, serving as a benchmark for measuring performance.