CORRECT ANSWER D. ARCHER’S STOCK IS UNDERVALUED BY APPROXIMATELY...
78.
Correct answer d. Archer’s stock is undervalued by approximately 25% as calculated below.
Estimated market value
= Industry average P/E ratio x Archer earnings per share
= 14.00 x $3.20
= $44.80
Archer market difference
= $44.80 - $36.00
= $8.80
Percentage difference
= $8.80 ÷ $36.00
= 24.4%