document.write( "Question 172745: At year end, Ted's Company balance sheet showed total assets of $60 million, total liabilities (including preferred stock) of $45 million, and 1,000,000 shares of common stock outstanding. Next year, Ted is projecting that it will have net income of $1.5 million. If the average PE multiple in Ted’s industry is 15, what should be the price of Ted’s stock? \n" ); document.write( "

Algebra.Com's Answer #127614 by Mathtut(3670) $\"\"$ $\"About$

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you must first figure the earnings per share which would be
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\n" ); document.write( "earnings(1.5million)/number of shares(1 million
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\n" ); document.write( "eps=$1.5 (earnings per share)
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\n" ); document.write( "a PE(price per earnings) ratio is simply what your pay in multiples above what the earnings are.....if the earnings are 1.5 dollars per share a 15 PE or multiple would be 15 times that amount
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\n" ); document.write( "therefore $ $\"highlight%281.5%2815%29=22.50%29\"$ is the price that would be paid on Ted's stock if the equaled the industry PE multiple of 15. \n" ); document.write( "

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