Chapter 5

Stock price = P/E ×EPS. 20 × $.30 = $6.00 5-17. (Continued) c. Pulp Holt. 15 × $.30 = $4.50 26 × $.30 = $7.80. d. Clearly, the ultimate objective should be to maximize the stock price. While management would be indifferent between the two plans based on earnings per share, Holt Paper, with the less risky plan, has a higher stock price. 18. ................
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