Question
In: Finance
M/B AND SHARE PRICE You are given the following information: Stockholders' equity as reported on the...
M/B AND SHARE PRICE
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $5 billion, price/earnings ratio = 13, common shares outstanding = 38 million, and market/book ratio = 1.5. Calculate the price of a share of the company's common stock. Round your answer to the nearest cent.
Solutions
Expert Solution
So price of the company share is $197.37.
Pls refer below for explanation
--------------------------------------------------------------------------------------------------------------------------
Book value per share = Stock holders equity/ number of common shares
= 5000/ 38
= 131.58 per share
Market to book ratio = 1.5
Market price/ book value = 1.5
Market p[rice = 131.58 * 1.5
= $197.37 per share
--------------------------------------------------------------------------------------------------------------------------
Hope that helps.
Feel free to comment if you need further assistance J
jeff jeffy answered 1 year agoRelated Solutions
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