Practice Assignment #7

13. If the target PE ratio for a firm is 12 earnings per share is $4.00 and dividends per share is $2.00, then the stock price of the firm is: a, $15 b. $24 c. $48 d. $50 e. none of the given answers 14. Company A is expected to pay an year-end dividend of $5 (D)share of its common stock. After the dividend payment the stock is expected to sell at $115 per share. The required rate of return on the common stock is 25%. Then the current price of the stock is: a. $110 b. $120 c. $100 d. $96 e. none of the given