Ramsay Corp. currently has an EPS of $3.83, and the benchmark PE for the company is 19.
Question:
Ramsay Corp. currently has an EPS of $3.83, and the benchmark PE for the company is 19. Earnings are expected to grow at 6.5 percent per year.
a. What is your estimate of the current stock price?
b. What is the target stock price in one year?
c. Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year? What does this tell you about the implicit stock return using PE valuation?
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Step by Step Answer:
a Using the equation to calculate the price of a share of stock with the P...View the full answer
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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