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Question 28 (6 points) The common stock for Southern Sofa Company (SSC) is currently selling for $27.50. Earnings for year just completed were $1.10 per
Question 28 (6 points) The common stock for Southern Sofa Company (SSC) is currently selling for $27.50. Earnings for year just completed were $1.10 per share, giving the stock a current P/E (or earnings multiple) of 25. Stock analysts estimate that earnings per share will be $1.35 for next year (t-1), and $1.90 for the year after that (i.e., two years from now; t=2). You believe that SSC deserves a future P/E (earnings multiple) that is 1.2 times the industry average P/E for similar furniture companies (i.e., a P/E that is 20% higher than the industry average). Analysts estimate that the industry average P/E (earnings multiple) will be 32 for the the foreseeable future. If investors require a 10% rate of return, estimate the value for SSC stock two years from now and then calculate what it should be worth now. (Use the PE Valuation approach for this problem.) [Enter your answer to two decimal places (e.g. 77.11). Do not enter a dollar sign or any other symbols as part of your answer.] Your
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