A privately held company ABB wants to be listed on a stock exchange. The company expects to earn a net profit of $50 million next year. In order to estimate its equity value, management decided to use price multiple valuation model. Based on P/E ratios of public listed companies from the same industry (listed below), calculate the estimated value of equity for company ABB.

Company 1:

P/E ratio: 7.0

Company 2:

P/E ratio: 12.0

Company 3:

P/E ratio: 8.0

Company 4:

P/E ratio: 9.0

Company 5:

P/E ratio: 6.0

Q: Calculate the estimated value of equity for company ABB by using the price multiple from your answer in (a).