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Question 2: On November 1,2021, Mr. Daniel Kim, an individual stockirvestor, pays attention to the news that Donsguk Corp. may report an earrings surprise thanks

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Question 2: On November 1,2021, Mr. Daniel Kim, an individual stockirvestor, pays attention to the news that Donsguk Corp. may report an earrings surprise thanks to the booming domand for natural gas pipe associated with rising shale gas production in the US. In order to make an investment judgement through a price maltiple comparison method, Mr. Kitn choores to doploy PER (Price-Earnings Ratio) computed as following: PER - per share stock price of Dongeuk Corp. November 1, 2021)/expected per share net income for the fiscal year of 2021 For comparison parpose, Mr. Kim selects 5 tirms that belons to the same industry as Donkruk Corp. that are also simiar in firm tizo, and calculates the averaze PER uring above formula. As a result, Mr. Kim gets a muitiple of 15 for Dongruk Corp, whereas the average multiple of those five firma is 12. Based on this raultiple comparison, Mr. Kim concluded that the stock market overprices the sharen of Dongguk Corp. and eives up investment in Doneguh Corp. shares. Requirement: The method of price multiple comparison, as explained above, that implementation problems as well as concepeual problems. Indicate one for each of implementation and concepthal problems. (13 points)

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