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Suppose that Saudi Aramco has earnings per share of $3.45.The average oil company has a P/E of 12.5. However, Aramco should likely receive a positive
Suppose thatSaudi Aramcohas earnings per share of $3.45.The average oil company has a P/E of 12.5. However, Aramco should likely receive a positive adjustment as it has access to the largest oil reserves in the world. Thus, as an analyst you decide to do valuation by price earnings multiples, but to estimate the value of a share ofSaudi Aramco you apply a 10% premium on the multiples valuation. What should be the value of a share ofSaudi Aramco?
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