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The current market value of a firm's share is $32 million, with 20 million shares outstanding. The net profit after tax is estimated to be
The current market value of a firm's share is $32 million, with 20 million shares outstanding. The net profit after tax is estimated to be $5 million. Investors are willing to pay a value equivalent to 20 times of the firm's earnings. Based on the price-earnings multiple valuation model, are the firm's shares fairly priced?
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
