You have been asked to value a private company using Method of Comparables. You believe you...

You have been asked to value a private company using Method of Comparables. You believe you have found a comparable publiccompany with the following data (in millions):

Sales	$22,534.00
Earnings	$5,254.00
Book value	$13,422.32
Market value	$85,432.23

You were given the following data of the private company (in millions):

Sales	14,324.23
Earnings	8,323.11
Book value	10,333.10
Number of shares outstanding	23,000.00

Please use Price/Sales, Price/Earnings, and Price/Book to calculate the estimated price per share for the private company. Please use equal weighting of all the ratios to calculate the estimate price per share.

		$3.70 per share
		$5.11 per share
		$7.54 per share
		$9.11 per share

Solutions

Expert Solution

the price per share is estimated using the price/sales ratio , price/earnings ratio, price/book ratio for the comparable co.

then the average of the prices computed using the above ratio is taken since the ratios are assumed to be equally weighted, and we get the estimated price per share for the private company

jeff jeffy answered 1 year ago

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