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Suppose that A and B are typical firms in a particular industry, with earnings and market capitalisation given by the following: Company A Earnings: 100

Suppose that A and B are typical firms in a particular industry, with earnings and market capitalisation given by the following:

Company A

Earnings: 100 million MArket cap: 1500 million

Company B

Earnings: 300 million MArket cap: 3600 million

Using the method of comparables and the price-to-earnings ratio, the value of a start-up firm in this industry with expected earnings of $1.2 million is:

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