Concept explainers
A
To calculate: The selling price of stock when the current year earnings are to be $2 per share and market capitalization rate is 12%.
Introduction: The selling price of the share is the value of the share at which it is sold in the market. The stock price can be compared to the intrinsic value by using price earnings ratio. So determination of selling price of the stock is more important.
B
To calculate: The expected selling price of MF shares in three years is to be determined.
Introduction: The selling price of the share is the value of the share at which it is sold in the market. The stock price can be compared to the intrinsic value by using price earnings ratio. So determination of selling price of the stock is more important.
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