A client would also like you to estimate the value of a private company in which she has invested. The company has 1.5 million shares of common stock outstanding. You and client have discussed the earnings history and the outlook for future earnings. You agree that for valuation purposes you will use trailing 4 quarters earnings per share of $5. Your research indicates that the Price Earnings Ratio for comparable publicly traded companies is 18. Using the PE benchmark approach, what A.) .$90,000,000 B.) S 225.000.000 C.) $150.000 D.) $135.000.000 is the value of the company? Show all work!
A client would also like you to estimate the value of a private company in which she has invested. The company has 1.5 million shares of common stock outstanding. You and client have discussed the earnings history and the outlook for future earnings. You agree that for valuation purposes you will use trailing 4 quarters earnings per share of $5. Your research indicates that the Price Earnings Ratio for comparable publicly traded companies is 18. Using the PE benchmark approach, what A.) .$90,000,000 B.) S 225.000.000 C.) $150.000 D.) $135.000.000 is the value of the company? Show all work!
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
am. 126.
Transcribed Image Text:A client would also like you to estimate the value of a private company in which she has invested. The company has 1.5 million shares of common stock outstanding. You and
client have discussed the earnings history and the outlook for future earnings. You agree that for valuation purposes you will use trailing 4 quarters earnings per share of $5.
Your research indicates that the Price Earnings Ratio for comparable publicly traded companies is 18. Using the PE benchmark approach, what A.) . $90,000,000 B.) $
225,000,000 C.) $150,000 D.) $135,000,000 is the value of the company? Show all work!
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education