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    Market Value Ratio - Lane Inc

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    Lane Inc. just reported net income of $3,000,000, and its current stock price is $30 per share. Lane is forecasting $4,000,000 in net income next year, but it also expects it will have to issue 300,000 new shares of stock (raising its shares outstanding from 1,500,000 to 1,800,000). If Lane's forecast turns out to be right, and its price/earnings (P/E) ratio does not change, what does Lane expect its stock price to be one year from now?

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    Solution Preview

    Current Price earnings ratio= Current stock price/Current EPS.

    Current EPS= Net ...

    Solution Summary

    Response provides steps to compute market value ratio.