CPAnet Forum: BEC question

Active Topics

Memberlist

Help

BEC STUDY GROUP
CPAnet Forum : BEC STUDY GROUP

Topic: BEC question (

Topic Closed)

Author

Message

<< Prev Topic | Next Topic >>

shally
Newbie
Newbie

Joined: 05 Apr 2011
Online Status: Offline
Posts: 27

Posted: 22 Apr 2011 at 02:34 \| IP Logged

I have a question from "financial evaluation". i think
the solution given in the book is wrong..anyone preparing
for BEC could confirm the solution please...it will be of
great help..thanks!
Question:
Current Price of share : $100
EPS is $10
Expected growth rate 2.5%
Using PEG Ratio what is the projected stock price?

Choices are $41, $42, $105, $108

faten
Newbie
Newbie

Joined: 08 Jun 2010
Location: United States
Online Status: Offline
Posts: 43

Posted: 22 Apr 2011 at 13:10 \| IP Logged

I think it is wrong too because according to my calculation the answer should be $102.5

I calculated as follows: =[(100/10)/2.5]x (10*1.025)x 2.5

If anyone think that this is wrong please correct me, and explain why. thank you

shally
Newbie
Newbie

Joined: 05 Apr 2011
Online Status: Offline
Posts: 27

Posted: 22 Apr 2011 at 14:58 \| IP Logged

i too got the same answer..its a pretty straight forward
question...this question is from :
Becker review 2011 -Topic 4 of Financial Mgt.
Homework B3/CPA -06139/question 9 of 13

ThreeLetters=$
Newbie
Newbie

Joined: 19 Apr 2011
Online Status: Offline
Posts: 30

Posted: 22 Apr 2011 at 22:56 \| IP Logged

Be sure that you check the updates to the Becker books online. They specifically indicate their calculation for this question is wrong and go through the correct calculation. Your answer is indeed correct...

There are several other things that are wrong (other than really bad grammar mistakes) in the Becker materials that they point out in the updates for each subsection of BEC.

Search for other posts by ThreeLetters=$

shally
Newbie
Newbie

Joined: 05 Apr 2011
Online Status: Offline
Posts: 27

Posted: 24 Apr 2011 at 15:07 \| IP Logged

thanks! that solves my problem and also restores my
confidence that the book can be wrong too..:)

Sorry, you can NOT post a reply.
This topic is closed.

Printable version

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum