FIN 571 Course Great Wisdom / tutorialrank.com FIN 571 Course Great Wisdom / tutorialrank.com | Page 46

1. Please create a current income statement using the same format
as found in the lecture. (5 points)
2. Please calculate earnings per share. (2 points)
3. Please calculate the price/earnings multiple assuming that the
current stock price is 10 dollars per share. (2 points)
2. Create a two-year forecast of the income statement from the
information provided in problem number one. Please create
three columns of data: current year, year 2, and year 3. Assume
that sales increase ten percent per year for year's two and three.
Please show the earnings per share for each of the three years.
(10 points)
3. Please estimate the stock price for year's two and three,
assuming that the current PE multiple remains constant for each of the
two forecasted years. (6 points)

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FIN 571 Week 5 Connect Problems

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1.The difference between the present value of an investment’s future
cash flows and its initial cost is the:
payback period.