Berta, Inc., currently has an EPS of $3.85 and an earnings growth rate of 7 percent....

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Question

Berta, Inc., currently has an EPS of $3.85 and an earnings growth rate of 7 percent. The benchmark PE ratio is 21. What is th

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Answer 1

Answer #1

EPS for year 5=$3.85*(1+Growth Rate)^5

=$3.85*(1.07)^5

=$5.39982416

PE ratio=Stock price/EPS

Target Stock price=$5.39982416*21

=$113.40(Approx).

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Answer 2

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