Last year, Rec Room Sports reported earnings per share of $8.80 when its stock p

Question

Last year, Rec Room Sports reported earnings per share of $8.80 when its stock price was $246.40. This year, its earnings increased by 20 percent. If the P/E ratio remains constant, what is likely to be the price of the Stock? (Round your answer to 2 decimal places.)

Last year, Rec Room Sports reported earnings per share of $8.80 when its stock price was $246.40. This year, its earnings increased by 20 percent. If the P/E ratio remains constant, what is likely to be the price of the Stock? (Round your answer to 2 decimal places.)

Explanation / Answer

Answer:

P/E Ratio =Price per share/ earning per share = 246.40/8.80 = 28 Times

So, Earning this year =8.80 *1.20 =10.56

SO, Stock price will be = 28*10.56 =$ 295.68

Thanks

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.