Question

You are given the following information: Stockholders' equity = $323 million; price/earnings ratio = 14; shares outstanding = 8,800,000; and market/book ratio =7.7. Calculate the market price of a share of the company's stock..

Answer 1

$282.59 per share

Explanation:

Given that,

Stockholders' equity = $323 million

price/earnings ratio = 14

shares outstanding = 8,800,000

Market/book ratio =7.7

Book Value per share:

= Stockholders' equity ÷ shares outstanding

= $323,000,000 ÷ 8,800,000

= $36.70

Market price per share:

= Book Value per share × Market/book ratio

= $36.70 × 7.7

= $282.59 per share