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18 March, 20:02

The Blooming Flower Co. has earnings of $3.68 per share. a. If the benchmark PE for the company is 18, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. If the benchmark PE for the company is 21, how much will you pay for the stock?

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  1. 18 March, 22:14
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    a) $66.24

    b) $77.28

    Explanation:

    The price to earnings ratio (PE ratio) is a valuation used by investors to determine if a stock is overvalued or undervalued.

    Payment for stock is the product of Benchmark PR ratio and earnings per share.

    Given that the earnings per share is $3.68 per share

    a) If the benchmark PE for the company is 18

    Payment for stock = Benchmark PR ratio * earnings per share = 18 * $3.68 per share = $66.24

    a) If the benchmark PE for the company is 21

    Payment for stock = Benchmark PR ratio * earnings per share = 21 * $3.68 per share = $77.28
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Home » Business » The Blooming Flower Co. has earnings of $3.68 per share. a. If the benchmark PE for the company is 18, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b.
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