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Ashley Homebuilding is about to go public. The investment firm of Blake, Webber, and Company is attempting to price the issue. The home building industry
Ashley Homebuilding is about to go public. The investment firm of Blake, Webber, and Company is attempting to price the issue. The
home building industry generally trades at a percent discount below the PE ratio on the S&PTSX Composite Index. Assume that
index currently has a PE ratio of The firm can be compared to the home building industry as follows:
Assume, in assessing the initial PE ratio, the investment dealer will first determine the appropriate industry PE based on the S&PTSX
Composite Index. Then a quarter point will be added to the PE ratio for each case in which Ashley Homebuilding is superior to the
industry norm, and a quarter point will be deducted for an inferior comparison.
What should the initial PE be for the firm? Round the final answer to decimal places.
Initial PE ratio
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