Flex Co. just paid total dividends of $525,000 and reported additions to retained earnings of $1,575,000. The company has 495,000 shares of stock outstanding and a benchmark PE of 15.1 times. What stock price would you consider appropriate?

a.$52.80

b.$17.60

c.$70.40

d.$63.36

e.$66.88

Question

Maddison Benton

Business

28 September, 16:10

Flex Co. just paid total dividends of $525,000 and reported additions to retained earnings of $1,575,000. The company has 495,000 shares of stock outstanding and a benchmark PE of 15.1 times. What stock price would you consider appropriate?

a.$52.80

b.$17.60

c.$70.40

d.$63.36

e.$66.88

+5

Answers (1)

Know the Answer?

Ronin Rodgers · Answer 1

Correct answer is 20.80$.

Options given are incorrect.

Explanation:

Earnings per share = (Dividend + addition to retained earnings) / Total number of shares

Earnings per share = (525000 + 1570000) / 495000

EPS = 1.37777

PE ratio = Stock price / EPS

15.1 = Stock price / 1.377777

Stock price = 15.1 x 1.37777

Stock price = 20.80$

Flex Co. just paid total dividends of $525,000 and reported additions to retained earnings of $1,575,000. The company has 495,000 shares of stock outstanding and a benchmark PE of 15.1 times. What stock price would you consider appropriate?a.$52.80b.$17.60c.$70.40d.$63.36e.$66.88

Flex Co. just paid total dividends of $525,000 and reported additions to retained earnings of $1,575,000. The company has 495,000 shares of stock outstanding and a benchmark PE of 15.1 times. What stock price would you consider appropriate?

a.$52.80

b.$17.60

c.$70.40

d.$63.36

e.$66.88