Answer:
a.$36.80
b. $43.70
Explanation:
a. Calculation to determine What stock price would you consider appropriate
Using this formula
P= Benchmark PE ration x EPS
Let plug in the formula
P=16($2.30)
P=$36.80
Therefore What stock price would you consider appropriate is $36.80
b. Calculation to determine the stock price if the benchmark PE were 19
Using this formula
P= Benchmark PE ration x EPS
Let plug in the formula
P=19($2.30)
P= $43.70
Therefore the stock price if the benchmark PE were 19 will be $43.70
