The current price of Parador Industries stock is $67 per share. Current sales per share are $18.75,

Question:

The current price of Parador Industries stock is $67 per share. Current sales per share are $18.75, the sales growth rate is 8 percent, and Parador does not pay a dividend. The expected return on Parador stock is 13 percent. What one-year-ahead P/S ratio is consistent with Parador’s expected return and sales growth rate?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...