InfoTech Solutions Inc. has a historic P/E multiple of 26, a current E

InfoTech Solutions Inc. has a historic P/E multiple of 26, a current EPS of $1.10 projected to grow by 5% in the coming year, and a forward looking P/E multiple of 22. With this information please estimate the current price of the firm’s stock

A) $30.03
B) $28.60
C) $26.20
D) $25.41

ANSWER

D
Explanation: D) P = D1 * multiple = $1.10 * (1.05 ) * 22 = $25.41.