Expected earnings stream for sprint

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Reference no: EM13769136

The expected earnings stream for Sprint for the next three years is expected to be $40,000, $50,000, and $50,000 respectively (assume the firm falls off the face of the earth in three years as we did in class). Meanwhile, interest rates are expected to be 3 % for the next three years. Given 1,000 shares of existing stock, answer the following questions:

1. The price earnings ratio for this firm is (use the first year earnings as we always do for your calculation) is: (explain how you got it)

a) between 2 and 3 b) between 3and 4 c)greater than 4 d) none of the above a

2. The actual stock price is above $100. True or False and why?

Reference no: EM13769136

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