The Perfect Rose Co. has earnings of $2.30 per share. The benchmark PE for the company is 16.

The Perfect Rose Co. has earnings of $2.30 per share. The benchmark PE for the company is 16. Explanation

  

Using the equation to calculate the price of a share of stock with the PE ratio:   P = Benchmark PE ratio × EPS   So, with a PE ratio of 16, we find:   P = 16($2.30) P = $36.80   What if the benchmark PE were 19? And with a PE ratio of 19, we find:   P = 19($2.30) P = $43.70