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Foundations Of Financial Management
Found in: Page 495
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

Short Answer

Tiger Golf Supplies has $25 million in earnings with 7 million shares outstanding. Its investment banker thinks the stock should trade at a P/E ratio of 31. Assume there is an underwriting spread of 7.8 percent. What should the price to the public be?

The price to the public should be $110.67.

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Step by Step Solution

Computation of earnings per share

Computation of price to the public

Hence, the price offered to the public should be $110.67

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