3 Company A is a private firm. You are trying to estimate A's stock price using information from its comparable firm: Company B. The table below shows selected financials for Company A and B. Stock Company Price per share A B $120 O $110 O $75 $66 Assuming neither company has any preferred stock. If we assume that both A and B have the same price-to-earnings ratios, company A's stock price should be set at $90 # of shares outstanding (millions) 8 5 Net Income (in million dollars) $40 $22 K

Company A is a private firm. You are trying to estimate A's stock price using information from its comparable firm: Company B. The table below shows selected financials for Company A and B. Assuming neither company has any preferred stock. If we assume that both A and B have the same price-to-earnings ratios, company A's stock price should be set at $120 $110 $75 $90