1. Niagular Corp. just reported a net income of $9,000,000 & its current stock price is $31.25 per share. Niagular Corp. is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 2,500,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,000,000)

A. If the forecast turns out to be correct & its price-to-earnings (P/E) ratio does not change, what do they expect their stock price to be one year from now?

  • 26.87
  • 31.25
  • 20.15
  • 33.59

B. One year later its stock is trading at $38.42 & the company reports its common equity value as $42,992,000. Its market-to-book (M/E) ratio is?

  • 1.16x
  • 7.16x
  • 17.16x
  • 10.74x