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Problem Five. A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over the next five years. What is the
Problem Five. A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over the next five years. What is the estimated stock price in five years if an investor thinks the stock will then sell for a 10 P/E ratio? Second Question. The stock currently trades at $200 per share. If the investor buys the stock today and sells the stock in five years (based on the price you computed above), what compounded return does the investor earn. [from the last lecture slides].
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