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Assume a firm has a current P / E ratio of 1 9 and its current EPS is $ 1 . 2 5 . It

Assume a firm has a current P

/

E ratio of

19

and its current EPS is $

1.25 .

It has increased its earnings per share

6 %

annually in the past and this rate is likely to continue for some time. If the P

/

E ratio is

expected to decrease to

17

in five years, what is the stock price expected to be in year

five?

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