Question

. An analyst has determined that the intrinsic value of Coca Cola stock is $80 per share using the capitalized earnings model. If the typical P/E ratio in the computer industry is 22, then it would be reasonable to assume the expected EPS of Coca Cola in the coming year is

Answer 1

Answer:

$3.64

Explanation:

We know that :

Price / Earning ratio (P/E ratio) = Price per Share ÷ Earnings per Share

thus :

Earnings per Share = Price per Share ÷ Price / Earning ratio

                                  = $80 ÷ 22

                                  = $3.636 or $3.64

therefore,

the expected EPS of Coca Cola in the coming year is $3.64