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Sobchak Security Corp (SSC) is trying to value their own stock for a potential sale to a strategic buyer. SSC recently reported the following financial

Sobchak Security Corp (SSC) is trying to value their own stock for a potential sale to a strategic buyer. SSC recently reported the following financial data:

Profit Margin = 9.5%; Return on Equity = 17.9%; Asset Beta = 1.25; D/E Ratio = 2.00

SSC's industry rivals have the following characteristics:

The Dude and Associates: Profit Margin = 10.7%; Return on Equity = 17.6%; Asset Beta = 1.35; D/E Ratio = 2.25; Price to Sales = 1.1

Nihilist Security: Profit Margin = 9.3%; Return on Equity = 18.1%; Asset Beta = 1.19; D/E Ratio = 1.98; Price to Sales = 0.71

Jackie Treehorn's Video Monitoring: Profit Margin = 2.2%; Return on Equity = 35.9%; Asset Beta = 3.50; D/E Ratio = 7.00; Price to Sales = 1.39

None of the firms in this industry pay any dividends.

If SSC has Sales of $62.5 million and 9 million shares outstanding, what should their reservation price be in this potential acquisition?

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