Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
You are considering purchasing stock in a small illiquid enterprise. The most recent net income for the firm was $13,567,000, and there are 568,000 shares
You are considering purchasing stock in a small illiquid enterprise. The most recent net income for the firm was $13,567,000, and there are 568,000 shares outstanding. To make your valuation estimate you will calculate the P/E Ratio for a comparable, publically traded company. The shares of that firm are selling for $42.72. Its most recent net income was $25,950,000 and there are 5,550,000 shares outstanding. Based on this comparable P/E Ratio, how much should you be willing to pay for the shares of your firm of interest?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started