Question 25 4 pts Mr. Hawk, an analyst at Ruckus Investments, is analyzing Aspen Corporation (current stock price is $16.25) using market multiples. He plans to start with a look at the firm's price-to-earnings (P/E) ratios. Ruckus Investments requires that all research reports include an estimate of the earnings for the upcoming (next) quarter and for the next year. Hawk has gathered historical and estimated income statement information in Exhibit 3, and actual results for Aspen and some of its competitors in Exhibit 4. Exhibit 3: Aspen Corp. 1Q 2009 20 2009 3Q 2009 4Q 2009 1Q 2010 2010 Year Actual Actual Actual Actual Estimated Estimated Net Income $2.3 mil. $2.0 mil. $2.1 mil. $2.6 mil $2.5 mil $10.1 mil. Common Stock Dividends $1.0 mil. $1.0 mil. $1.0 mil. $1.0 mil. $1.1 mil. $4.4 mil. Shares Outstanding 10 mil. 10 mil. 10 mil. 10 mil. 10 mil. 10 mil. Exhibit 4: Aspen Corp. Industry Group Total Isharac Exhibit 4: Aspen Corp. Industry Group Current Price Sales Interest (after-tax) Earnings Total Assets Total Shares Common Outstanding Equity Aspen Corp. $16.25 $150 mil. $5.0 mil. $9.0 mil. $208 mil. $98 mil. 10 mil. Vail Corp. $30.50 $109 mil. $2.4 mil. $8.2 mil. $150 mil. $82 mil. 5 mil. Breck Corp. $14.33 $172 mil. $0.6 mil. $18.6 mil. $175 mil. $155 mil. 15 mil. Telluride Corp. $108.40 $177 mil. $5.4 mil. $23.8 mil. $355 mil. $265 mil. 3 mil. Based on underlying earnings, the trailing and leading P/E ratios for Aspen Corp. will be closest to: Trailing PE: 18.1X/Leading PE: 16.1% Trailing PE: 18.1x/ Leading PE:28.5x Trailing PE: 32.5x / Leading PE: 16.1x Trailing PE: 32.5x / Leading PE 28.5x