You are estimating the price-earnings multiple to use to value Paramount Corporation by looking at the average

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You are estimating the price-earnings multiple to use to value Paramount Corporation by looking at the average price-earnings multiple of comparable firms. The following are the price-earnings ratios of firms in the entertainment business.

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a. What is the average PE ratio?

b. Would you use all the comparable firms in calculating the average?
Why or why not?

c. What assumptions are you making when you use the industry-average PE ratio to value Paramount Corporation?

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

ISBN: 9781118011522

3rd Edition

Authors: Aswath Damodaran

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Question Posted: May 23, 2024 02:01 AM

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You are estimating the price-earnings multiple to use to value Paramount Corporation by looking at the average

Question:

Firm Disney (Walt) Time Warner PE Ratio 22.09 36.00 King World Productions 14.10 New Line Cinema 26.70

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

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