You notice that coca-cola has a stock price of $41.09 and eps of $1.89. its competitor pepsico has eps of $3.90. but, jones soda, a small batch seattle-based soda producer has a p/e ratio of 35. based on this information, what is one estimate of the value of a share of pepsico stock?

$84.79

Explanation:

For computing the value of a share of PepsiCo stock, first we have to determine the P/E ratio for Coca-cola which is shown below:

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

                                   = $41.09 ÷ $1.89

                                   = $21.74

Now the value of a share for PepsiCo stock would be

= Price-earnings ratio × EPS

= $21.74 × $3.90

= $84.79

All other information which is given is not relevant. Hence, ignored it

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