Please show all steps, I really need to learn how to do this. Suppose the EPS of

Question

Please show all steps, I really need to learn how to do this.

Suppose the EPS of a company is $10. There is is one transitory items restructuring charges that total $3 per share on an after-tax basis. Restructuring charges are an expense, so without the restructuring charge, the EPS would have been $13. Looking on yahoo finance I observe a PE ratio of 15. I believe the correct discount rate is 10 percent. What is the market value of the annuity from the assets in place?

a) 10  b)70  c)130  d) 150

Explanation / Answer

market value=10*15=150

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