You are deciding whether to invest in Goldmine, Inc, a national mining company. You observe the Price to Earnings ratio of the following companies.

Company

P/E Ratio

Nucor Copper Mining

23.9

Gem Razor and Shave Cream Company

16.9

Forensic Silver Mining

24.1

Geld Mining Company

24.0

Lavoris Household Goods

17.1

JP Mushing Investments

19.0

Goldmine has earnings of $90 million and has 15 million shares outstanding. It currently trades at $114/share in the market. Respond to two questions:

a)Should you buy Goldmine and why?

b)If the data in the table above remains unchanged over time, what price approximately (to the nearest dollar) do you expect Goldmine eventually to rise or fall to?