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Earnings multiplier model to calculate expected price

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You are provided the following information about Javier Corporation. Sales for the year 2004 were $500,000: the Net Profit Margin (NPM) was 15%. Analysts project sales to grow by 12% next year (that is 2005).However because of more competition, the NPM is expected to decline by 10% for the year 2004. The expected P/E multiple for the year 2005 is 22. The total number of shares outstanding is 20,000.

Use the earnings multiplier model to calculate the expexted price for Javier Corporation in the year 2005.

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Earnings multiplier models to calculates the expected price is examined.

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