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A firm's current market value of equity is $20 million. It has one million shares outstanding. The firm's equity multiplier is one, and it had sales of $50 million last year. Its profit margin was 5%. What is the firm's implied price- earnings ratio? a. 40 b. 5 c. 16 d. 20 e. 8

A firm's current market value of equity is $20 million. It has one million shares outstanding. The firm's equity multiplier is one, and it had sales of $50 million last year. Its profit margin was 5%. What is the firm's implied price- earnings ratio? a. 40 b. 5 c. 16 d. 20 e. 8

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 6P
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A firm's current market value of equity is $20 million. It has one million shares outstanding. The firm's equity multiplier is one, and it had sales of $50 million last year. Its profit margin was 5%. What is the firm's implied price- earnings ratio? a. 40 b. 5 c. 16 d. 20 e. 8
Transcribed Image Text:A firm's current market value of equity is $20 million. It has one million shares outstanding. The firm's equity multiplier is one, and it had sales of $50 million last year. Its profit margin was 5%. What is the firm's implied price- earnings ratio? a. 40 b. 5 c. 16 d. 20 e. 8
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