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Answer to Question #25915 in Finance for Campbell Liles

Question #25915
Plush Pilots, Inc., has balance sheet equity of $6.6 million. At the same time, the income statement shows net income of $798,600. The company paid dividends of $403,293 and has 100,000 shares of stock outstanding. If the benchmark PE ratio is 30, what is the target stock price in one year?
Expert's answer
PE ratio = stock price/earnings per share, so Stock price = Dividends/shares outstanding*PE ratio

Target stock price = $403,293/100,000*30 = $120.99

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