You are estimating the price/earnings multiple to value Paramount Corporation, by looking at the average price/earnings multiple of comparable firms. The following are the price/earnings ratios of firms in the entertainment business.

Firm	P/E Ratio
Disney (Walt)	22.09
Time Warner	36.00
King World Productions	14.10
New Line Cinema	26.70
CCL	19.12
PLG	23.33
CIR	22.91
GET	97.60
GTK	26.00

Assume that the business profiles of the firms listed above are similar and that in general, they are a good match on the criteria discussed in class. Would you use all the comparable firms in calculating the average? Which of the following statements best describes your answer.

1) Yes. I would use all of the comparable firms listed since they are a good match in terms of a business profile and other dimensions discussed in class.

2) No. I would not use all comparable firms listed. It is not possible for there to be so many quality matches for a given firm.

3) Yes. I would use all comparable firms listed. The goal in benchmarking is to get as many firms to match as possible.

4) No. I would not use all comparable firms listed. There appears to be at least one outlier with a very large P/E ratio.