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Consider the following table of Earnings Components: Firm A Firm B Firm C Reported EPS $ 12 $ 15 $ 18 Analysts EPS composition: Permanent

Consider the following table of Earnings Components:

Firm A Firm B Firm C
Reported EPS $ 12 $ 15 $ 18
Analysts EPS composition:
Permanent component (P = 5) 80 % 60 % 75 %
Transitory component (T = 1) 10 % 35 % 25 %
Value-irrelevant component (0 = 0) 10 % 5 % 0 %

The implied total earnings multiple of Firm A is:

Multiple Choice

  • 10.00

  • 5.00.

  • 1.00.

  • 4.10.

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