The current price of ABC Corporation stock is $26

Accounting Apr 02, 2021

The current price of ABC Corporation stock is $26.50 per share. Tomorrow the company will announce that next year's earning are expected to be $3 per share. The expected P/E multiple is 15 times. What price would you expect for ABC stock after the earning's news?

Expert Solution

Answer:

Price after news = 45.00

Step-by-step explanation

Price after news = Earnings per share * PE multiple

Price after news = 3.00*15

Price after news = 45.00

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