Plush Pilots, Inc., has balance sheet equity of $6.1 million. At the same time,
ID: 2631902 • Letter: P
Question
Plush Pilots, Inc., has balance sheet equity of $6.1 million. At the same time, the income statement shows net income of $927,200. The company paid dividends of $486,780 and has 200,000 shares of stock outstanding. If the benchmark PE ratio is 25, what is the target stock price in one year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Plush Pilots, Inc., has balance sheet equity of $6.1 million. At the same time, the income statement shows net income of $927,200. The company paid dividends of $486,780 and has 200,000 shares of stock outstanding. If the benchmark PE ratio is 25, what is the target stock price in one year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
Net Income = $927200
No of shares outstanding = 200000 shares
..
Therefore, earnings per share (EPS) = Net Income/ No of shares outstanding
= 927200/200000
= $4.636 per share
..
Given, Benchmark P/E ratio = 25
Therefore, target stock price in one year = EPS* Benchmark P/E ratio
= 4.636*25
= $115.90