World Wide Web Wares(4W, forshort) is an online retailer of small kitchen appliances and utensils. The firm has been around for a few years and has created a nice market niche for itself. Infact, it actually turned a profit lastyear, albeit a fairly small one. After doing some basic research on thecompany, you've decided to take a closer look. You plan to use theprice-to-sales ratio to value thestock, and you have collectedP/S multiples on the following Internet retailerstocks:

Company

P/S Multiples

Amazing.com

4.3

Really Cooking.com

3.9

Fixtures& Appliances Online

3.6

Find the averageP/S ratio for these three firms. Given that 4W is expected to generate $43 million in sales nextyear, and will have 7 million shares of stockoutstanding, use the averageP/S ratio you computed above to put a value on4W's stock.

The averageP/S ratio for the 3 firms is

The value of4W's stock is $