Problem 1: If you look at stock prices over any year, you will find high and low stock price for the year. Instead of single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to evaluate high and low stock price for the upcoming year.
Assume we have the following information on a particular company:
Year 1 Year 2 Year 3 Year 4
High price $89.38 $103.70 $125.54 $137.05
Low price 70.80 85.34 77.34 112.88
EPS 6.59 9.01 8.67 10.26
Earnings are expected to rise at 8.5 percent for the upcoming year.
problem1. What is high target stock price in one year?
problem2. What is low target stock price in one year?