To answer the multiple-choice questions, note down the answer on your answer page. You also need to offer a brief justification on your answer booklet for each one of your answers in this section. (minimum 100 words per question)

1. A firm is expected to generate earnings of $2.22 per share next year. The mean ratio of share price to expected earnings of competitors in the same industry is 15. Based on this information, the valuation of the firm's shares based on the price-earnings (PE) method is

a. $2.22.

b. $6.76.

c. $33.30.

d. none of the above