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dimulka [17.4K]
1 year ago
11

STU Corporation has $3 million in earnings on $20 million in sales and has 1 million shares outstanding. Earnings per share of c

omparable firm 1 is $5, and earnings per share of comparable firm 2 is $2. Comparable firm 1’s stock is trading for $50, and comparable firm 2’s stock is trading for $28. What is the estimated stock price of STU using the method of comparables? (Use average multiples of the comparable firms when doing the calculations.)
Business
1 answer:
Vesna [10]1 year ago
5 0

Answer:

$36

Explanation:

Computation for comparable firm 1

Price earning = Share price / Earning per share

= $50 / 5 = $10

Computation for comparable firm 2

Price earning = Share price / Earning per share

= $28 / 2 = $14

Average price earning = (Price earning of firm 1 + Price earning of firm 2) / 2

= ($10 + $14) / 2

= $12

Computation of stock price For STU

Stock price = Average price earning × Earning per share of STU

STU = 12 × ($3 million / $1 million) = $36

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High Brow Express deals strictly with two customers. The payment from Customer A averages $537,400 and has a collection delay of
Marizza181 [45]

Answer:

The answer is E.

Explanation:

Total payment from customers is:

$537,400 + $737,500

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Weighted average delay from customer A is:

($537,400/$1,274,900) x 3

=1.26 days

Weighted average delay from customer B is:

($737,500/$1,274,900) x 1

=0.58 day

Therefore, total weighted average delay is:

1.26 days + 0.58 day

=1.84days

5 0
1 year ago
Strategically , a company may phase out or sell an sbu. this is known as
sdas [7]
Strategically, a company may phase out or sell an SBU this is known as DIVESTMENT.
Divestment is the process of selling an asset to obtain financial goals. Divesting involves a company selling its assets to improve its value and obtain higher efficiency.

6 0
1 year ago
Suppose there are only two firms that sell Blu-ray players, Movietonia and Videotech. The following payoff Matrix shows the prof
Karolina [17]

Answer:

From the given Matrix we can see that if videotech is selecting a high price, movietonia has a higher profit when it is charging a low price and this profit is 18. Similarly when videotech is selecting a lower price movietonia again has a higher profit when it is selecting a lower price which is 10. This indicates that movie tonia has a dominant strategy of selecting a low price.

If movietonia is selecting a high price videotech has a a higher pay off of 18 when it is selecting a low price. In case movietonia is selecting a low price videotech again has a higher profit when it is selecting a low price and this profi is 10.

Therefore videotech and movietonia both have dominant strategy of selecting a low price and this implies that low price, low price will be the Nash equilibrium.

In case the two firms are not colluding, both of them will choose a low price.

This is definitely an example of business dilemma game. The statement is true.

Explanation:

6 0
1 year ago
Tom is responsible for ordering hardware for a custom home his company is building. The contractor installing the hardware is sc
ICE Princess25 [194]

Answer:

Free slack.

Explanation:

In project management, free slack refers to the amount of time that a certain task can be delayed and not affect the completion time of the general project. Slack time can be considered "just in case" time, because even though delays should be minimized, rarely you can eliminate them completely, and slack time gives you a little extra room for managing projects.

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3 0
2 years ago
For a particular competitive firm, the minimum value of average variable cost (AVC) is $12 and is reached when 200 units of outp
Makovka662 [10]

Answer:

The answer is: ALL THE OPTIONS ARE WRONG

Explanation:

A) In the short run, the firm will shut down if the price of its product is < $12.

B) In the long run, the firm will shut down if the price of its product is < $15.

C) The minimum value of variable cost equals the variable cost of producing 1 single unit, not the variable cost of producing 200 units.

D) If the firm's fixed costs are $500, it means that they decreased. According to the question the fixed costs were $690 (230 units x $3 per unit). So if the fixed costs decrease, then the average total cost should also decrease, not increase to $16.

4 0
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