New York Times Co. (NYT) recently earned a profit of $2.21 per share and has a P/E ratio of 19.70. The dividend has been growing at a 6.75 percent rate over the past six years. If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 21 in five years?

Question

Sarah Kaiser

Business

21 November, 21:26

New York Times Co. (NYT) recently earned a profit of $2.21 per share and has a P/E ratio of 19.70. The dividend has been growing at a 6.75 percent rate over the past six years. If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 21 in five years?

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Answers (1)

Know the Answer?

Luz Daniel · Answer 1

The answers are given below;

Explanation:

1. P/E Ratio=Price / EPS

19.7=Price / (2.21) ^5

Price=52.7*19.7=$1,038

2. 21=Price / (2.21) ^5

Price=21*52.7=$1,107