(i) You notice that PepsiCo (P

(i) You notice that PepsiCo (PEP) has a stock price of $72.06 and EPS of $3.93. Its competitor, the Coca-Cola Company (KO), has EPS of $2.13. Estimate the value of a share of Coca-Cola stock using only this data.

(ii) Suppose that in January 2006, Kenneth Cole Productions had EPS of $1.67 and a book value of equity of $12.17 per share.

a. Using the average P/E multiple in Table 9.1, estimate KCP’s share price.

b. What range of share prices do you estimate based on the highest and lowest P/E multiples in Table 9.1?

c. Using the average price to book value multiple in Table 9.1, estimate KCP’s share price.

d. What range of share prices do you estimate based on the highest and lowest price to book value multiples in Table 9.1?

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