QUESTION 5

Today is January 31, 2018. You are valuing a company using multiple methodologies. You obtained the following per-share value for Discounted Cash Flow, Residual Earnings, and Earnings Growth Analysis respectively:

Discounted Cash Flow 22.14

Residual Earnings 21.44

Earnings Growth 31.11

In addition, you found that the long-run historical average P/E ratio for the firm is 2.00. Furthermore, the long-run historical average earnings-per-share for the firm is $3.00.

If you weight all methods equally, what is the final per-share value? Please use Discounted Cash Flow, Residual Earnings, Earnings Growth Analysis as well as P/E ratio.

A) $18.14 per share

B) $20.17 per share

C) $23.55 per share

D) $25.99 per share