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Suppose that the average P/E multiple oil industry stocks are 18. is an integrated oil company and analysts at expected the company to earn $5.25 in the coming year. What is the intrinsic value of stock?

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abiolataiwo2015

Answer:

$94.50

Explanation:

Calculation for the intrinsic value of stock

Using this formula

Intrinsic value of stock=Average P/E multiple oil stock*Amount to earn

Let plug in the formula

Intrinsic value of stock=18*$5.25

Intrinsic value of stock=$94.50

Therefore the Intrinsic value of stock will be $94.50

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