Question: Assume a firm has a current P / E ratio of 1 9 and its current EPS is $ 1 . 2 5 . It

Assume a firm has a current P/E ratio of 19 and its current EPS is $1.25. It has increased its earnings per share
by 6% annually in the past and this rate is likely to continue for some time. If the P/E ratio is
expected to decrease to 17 in five years, what is the stock price expected to be in year
five?

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