Zorba's Is a Small Chain of Restaurants Whose Shares Are

question 32

Multiple Choice

Zorba's is a small chain of restaurants whose shares are not publicly traded.The average P/E ratio for similar restaurant chains is 16.5; the P/E ratio for the S&P 500 Index is 15.2.This year's earnings were $1.21 per share and next year's earnings are forecasted at $1.46 per share.A reasonable price for a share of Zorba's shares is [blank].

• A)$24
• B)$20
• C)$18
• D)$16

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