Firm A needs to know a possible target price for the IPO. We observe the following data for firms with similar projects: Company Share Price
Firm A needs to know a possible target price for the IPO. We observe the following data for firms with similar projects:
| Company | Share Price | Earnings | EPS | |
| Firm A | 70 | 1* | ||
| Firm B | 100 | 50 | 2 | |
| Firm C | 180 | 90 | 3 | |
| Firm D | 250 | 120 | 5 | |
*EPS for firm A are earnings divided by the number of shares at the IPO.
Which of the following is a good estimate of firm A's equity value?
a. 3500
b. 9800
c. 140
d. 50
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Authors: André Dorsman, Özgür Arslan-Ayaydin, Mehmet Baha Karan
1st Edition
3319322664, 978-3319322667
