M/B AND SHARE PRICE
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $6.75 billion, price/earnings ratio = 16.5, common shares outstanding = 74 million, and market/book ratio = 1.8. Calculate the price of a share of the company's common stock. Round your answer to the nearest cent.
$ 
| Book value of Shareholders equity = | 6750000000 | ||||||
| Market to book ratio = | 1.8 | ||||||
| So, Market value = 6750000000 * 1.8 = | 12150000000 | ||||||
| Common shares outstanding = | 74000000 | ||||||
| Price per share = Market value / common shares outstanding | |||||||
| 12150000000/74000000 | |||||||
| $164.19 | |||||||
| So, price of a share of company's common stock is $164.19 | |||||||
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