Compute the value of a share of Fellows Company stock using the price-earnings multiples method Valuation Using Price-Earnings Multiples. The Fellows Company is planning an initial public offering(IPO) and management would like to have an idea of an appropriate price to charge for a share of its stock.The company plans to issue 100,000 shares. The Fellows Company's most recent earnings per share (EPS) are$1.30; however, the consensus forecast among analysts who follow the company is for EPS to be $1.45. TheEPS and share price of four comparable firms are shown below:FirmEPSShare PriceP/E ratio$ 2.00$ 36.00A.181.2026.40225.0070.00142.2057.2026Compute the value of a share of Fellows Company stock using the price-eamings multiples method.IBCD

Value of share by Price earnings ratio = P/E ratio * Earnings per share

Answered: Compute the value of a share of Fellows…

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Compute the value of a share of Fellows Company stock using the price-earnings multiples method

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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