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11 June, 09:51

Favorita candy's stock is expected to earn $4.00 per share this year. its p/e ratio is 18%. what price is the stock price? (round your answer to 2 decimal places.

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  1. 11 June, 10:14
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    The price-earnings ratio (P/E ratio) is the measure of a company’s current stock price in relation to its per stock earnings. In the sample given, P/E Ratio of Favorita candy's stock is 18% and is expected to earn $4.00 per share this year. The price of the stock is calculated as follows:

    Market Value per Stock / Earnings per Stock = P/E ratio

    Let X the price value of stock in $

    Earnings per stock = $4

    P/E Ratio = 18%

    X/4 = 18

    X = 18X 4

    X = 72
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