20)

You would like to estimate the price of Stock ABC. One way you could do this is using the multiples method. You research your company and find that the P/E ratio of Stock XYZ, which a direct competitor of Stock ABC, is currently 12. You find that the current earnings per share for Stock ABC is $5.67. What price would be a good estimate for Stock ABC?

answer choices

$69.40

$75.25

None of these are correct

$86.40

$56.04