question archive You are given the following information: Stockholders' equity = $1,250 price/earnings ratio = 5 shares outstanding = 25 market/book ratio = 1
You are given the following information: Stockholders' equity = $1,250 price/earnings ratio = 5 shares outstanding = 25 market/book ratio = 1
Subject:BusinessPrice:2.87 Bought7
You are given the following information:
Stockholders' equity = $1,250
price/earnings ratio = 5
shares outstanding = 25
market/book ratio = 1.5.
Calculate the market price of a share of the company's stock.
a. $ 33.33
b. $ 75.00
c. $ 10.00
d. $166.67
e. $133.32
You are given the following information:
Stockholders' equity = $1,250
price/earnings ratio = 5
shares outstanding = 25
market/book ratio = 1.5.
Calculate the market price of a share of the company's stock.
a. $ 33.33
b. $ 75.00
c. $ 10.00
d. $166.67
e. $133.32
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ANSWER: B
Total market value = $1,250(1.5) = $1,875. Market value per share = $1,875/25 = $75.
Alternative solution:
Book value per share = $1,250/25 = $50. Market value per share = $50(1.5) = $75.
