Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4.4 P/E and Stock Price: Fontaine Inc. recently reported net income of $2 million. It has 500,000 shares of a common stock, which currently trades
4.4 P/E and Stock Price: Fontaine Inc. recently reported net income of $2 million. It has 500,000 shares of a common stock, which currently trades at $40 a share. Fontaine continues to expand and anticipates that 1 year from now its net income will be $3.25 million. Over the next year, it also anticipates that 1 year from now, its net income will be $3.25 million. Over the next year, it also anticipates issuing an additional 150 shares of stock so that 1 year from now it will have 650,000 shares of common stock. Assuming Fontaine's price/ earnings ratio remains at its current level, what will be its stock price 1 year from now
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started