During 2014, Alpha, Inc., had sales of $ 6.86 billion, operating profit of $ 2.20 billion, and net income of $ 3.40 billion. EPS was $ 6.75. On May 11, 2015, one share of Alpha’s common stock was priced at $ 79.41 on the New York Stock Exchange.
What investment capitalization rate did investors appear to be using to determine the value of one share of Alpha stock? The formula for the value of one share of stock uses EPS in the calculation.