The Dahlia Flower Company has earnings of $1.50 per share.

If the benchmark PE for the company is 16, how much will you pay for the stock?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

If the benchmark PE for the company is 19, how much will you pay for the stock?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

To determine the price you would pay for the stock based on the benchmark Price-to-Earnings (PE) ratio, you can use the following formula:

\[
\text{Stock Price} = \text{Earnings per Share (EPS)} \times \text{PE Ratio}
\]

Given the following information:

- **Earnings per Share (EPS)** = $1.50
- **Benchmark PE ratio** = 16 (and later 19)

### 1. With a PE of 16:

\[
\text{Stock Price} = 1.50 \times 16 = 24.00
\]

So, you would pay **$24.00** for the stock when the PE ratio is 16.

### 2. With a PE of 19:

\[
\text{Stock Price} = 1.50 \times 19 = 28.50
\]

So, you would pay **$28.50** for the stock when the PE ratio is 19.

### Summary:
- At a PE of 16, you would pay **$24.00**.
- At a PE of 19, you would pay **$28.50**.

Would you like further details or have any questions?

Here are some related questions to explore:
1. What does a PE ratio signify in stock valuation?
2. How can fluctuations in the PE ratio affect stock prices?
3. How would you estimate future stock prices based on expected earnings growth?
4. What factors can lead to changes in the PE ratio of a company?
5. How do you compare the PE ratio of different companies in the same industry?

**Tip**: A higher PE ratio suggests that investors expect higher future growth, while a lower PE ratio may imply slower growth expectations or higher risk.

The Dahlia Flower Company has earnings of $1.50 per share. If the benchmark PE for the company is 16, how much will you pay for the stock? If the benchmark PE for the company is 19, how much will you pay for the stock?

Learn how to calculate the stock price of Dahlia Flower Company using its earnings per share of $1.50 and different benchmark PE ratios of 16 and 19. This example covers key concepts in stock valuation and algebra, suitable for Grades 9-12.

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