You want to value the stock of a company that is not publicly traded. This company hasearnings of $4.25 per share, BV of equity of $9.85 share, and CFs to equity of $1.85 per share.-You have the following information on firms that are extremely similar to the firm that you'retrying to value:4.Stock priceper share14.85aBV of equityper sharea7.25Earningsper sharea2.48CFs to equityshareCompanyper1.36AC8.14ВaCа65.416.6234.963.8636.0914.234.28Come up with three appropriate estimates of the stock price for your firm of interest.

Question
Asked Nov 3, 2019
4 views

I'm struggling on this problem and have to put it into excel with formulas.

You want to value the stock of a company that is not publicly traded. This company has
earnings of $4.25 per share, BV of equity of $9.85 share, and CFs to equity of $1.85 per share.-
You have the following information on firms that are extremely similar to the firm that you're
trying to value:
4.
Stock price
per share
14.85a
BV of equity
per sharea
7.25
Earnings
per sharea
2.48
CFs to equity
share
Company
per
1.36
AC
8.14
Вa
Cа
65.41
6.62
34.96
3.86
36.09
14.23
4.28
Come up with three appropriate estimates of the stock price for your firm of interest.
help_outline

Image Transcriptionclose

You want to value the stock of a company that is not publicly traded. This company has earnings of $4.25 per share, BV of equity of $9.85 share, and CFs to equity of $1.85 per share.- You have the following information on firms that are extremely similar to the firm that you're trying to value: 4. Stock price per share 14.85a BV of equity per sharea 7.25 Earnings per sharea 2.48 CFs to equity share Company per 1.36 AC 8.14 Вa Cа 65.41 6.62 34.96 3.86 36.09 14.23 4.28 Come up with three appropriate estimates of the stock price for your firm of interest.

fullscreen
check_circle

Expert Answer

Step 1

Computation of the stock price:

...
help_outline

Image Transcriptionclose

A D 1 Particulars Company A В C 3 Stock price of a share (P) 4 Earnings for a share (E) 14.85 65.41 36.09 8.14 3.86 2.48 Book value of the 5 equity for a share (BV) Cash flow to 7.25 34.96 14.23 6.62 6 the equity for a share (CF) 1.36 4.28 5.99 7 P/E 8.04 9.35 8 P/BV 9 P/CF 2.05 1.87 2.54 10.92 9.88 8.43 10 Avg of P/E 11 Avg of P/BV 12 Avg of P/CF 13 Earnings of a share (given) Book value of the 7.79 2.15 9.74 4.25 9.85 14 equity for a share (given) Cash flow to 15 the equity for a share(given) 16 Price of the stock based on the earnings (1) 1.85 33.11 17 Price of the stock based on the book value (2) 18 Price of the stock based on the cash flow (3) 21.20 18.03

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Finance

Other

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: 6. A company just issued a 15-year bond that has a face value of $1,000 and a coupon rate of 10% Sim...

A: The price of a bond consists present value of all future coupon payments and the redemption payment....

question_answer

Q: A stock with a beta of 1.5 has an expected rate of return of 20%. If the market return this year tur...

A: Calculation of rate of return on stock:Rate of return on the stock is 3.5%.The market return is 11% ...

question_answer

Q: A proposed new project has projected sales of $222,000, costs of $96,500, and depreciation of $26,10...

A: The computation of operating cash flow is as follows:

question_answer

Q: 8) How much will I need to deposit into an account to have $6,500,000 in 10 years earning 5 % compou...

A: We will answer the first question since the exact one wasn’t specified. Please submit a new question...

question_answer

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: The future cash flows and the discount rate are the two factors on which the value of the firm relie...

question_answer

Q: MMS Corp borrows $1,650,000 today for a new building. The loan is an equal principal payment loan wi...

A: Computation of payment due amount:Hence, the due amount is $20,219.95 or $20,220.

question_answer

Q: Parents wish to have $110,000available for a​ child's education. If the child is now 99 years​ old, ...

A: If P is the amount set aside today, then it's future after year n, in an account offereting annual i...

question_answer

Q: Using Saudi Arabia as an example. Do you believe that cultural similarities among people can out wei...

A: Yes, i strongly believe that cultural similarities among people can out weight cultural differences ...

question_answer

Q: Executives at Microsoft are interested to get into the drone delivery business. Since it would take ...

A: (a) Calculation of present values of two options:Answer:Net present values of both options are $40 m...