Question

Shaomin Ltd had earnings per of share of $4.25 last year, earnings are expected to grow...

Shaomin Ltd had earnings per of share of $4.25 last year, earnings are expected to grow at 7.10% over the next twelve months and the forward PE is 18.6. Shaomin's price is closest to:

   A.   $79.05.

    B.   $84.66.

    C.   $73.81.

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Homework Answers

Answer #1

- Last year's earning per share = $4.25

Growth rate of earnings(g) = 7.10%

Earnings per share in year end 1 = Last year's earning per share*(1+growth rate)

Earnings per share in year end 1 = $4.25*(1+0.0710)

Earnings per share in year end 1 = $4.55175

- Forward P/E ratio = 18.6

Forward P/E Ratio = Current Price per share/Future Earnings per share

18.6 =Current Price per share/$4.55175

Current Price per share = $84.66

Option B

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