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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 over the past four years: |
Year 1 | Year 2 | Year 3 | Year 4 | |
---|---|---|---|---|
High price | $ 99.20 | $ 122.80 | $ 132.20 | $ 148.83 |
Low price | 74.03 | 90.14 | 70.82 | 117.35 |
EPS | 8.48 | 10.23 | 11.31 | 12.70 |
Earnings are projected to grow at 4 percent over the next year. |
a. | What is your 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 your low target stock price over the next year? |
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