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If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company: Year 4 $139.12 High price Low price EPS Year 1 $90.25 71.37 6.62 Year 2 $105.71 86.63 9.04 Year 3 $127.73 75.75 8.70 114.50 10.29 Earnings are expected to grow at 8 percent over the next year. a. What is the high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target price b. Low target price
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