Ratios: Price-Earnings Ratio (PE Ratio) Video Lessons

Concept

# Problem: The Venetian Corporation recently reported net income of $3,000,000. It has 600,000 shares of common stock, which currently trades at$50 a share.  Venetian continues to expand and expects that 1 year from now its net income will be $4,125,000. Over the next year it also anticipates issuing an additional 180,000 shares of stock, so that 1 year from now it will have 780,000 shares of common stock. Assuming its price/earnings ratio remains at its current level, what will be its stock price 1 year from now? a.$50.00 b. $47.27 c.$52.88 d. $38.46 e.$68.75

###### Problem Details

The Venetian Corporation recently reported net income of $3,000,000. It has 600,000 shares of common stock, which currently trades at$50 a share.  Venetian continues to expand and expects that 1 year from now its net income will be $4,125,000. Over the next year it also anticipates issuing an additional 180,000 shares of stock, so that 1 year from now it will have 780,000 shares of common stock. Assuming its price/earnings ratio remains at its current level, what will be its stock price 1 year from now? a.$50.00

b. $47.27 c.$52.88

d. $38.46 e.$68.75