The Charleston Company Is a Relatively Small, Privately Owned Firm

question 47

Multiple Choice

The Charleston Company is a relatively small, privately owned firm. Last year the company had after-tax income of $15,000, and 10,000 shares were outstanding. The owners were trying to determine the equilibrium market value for the stock, prior to taking the company public. A similar firm which is publicly traded had a price/earnings ratio of 5.0. Using only the information given, estimate the market value of one share of Charleston's stock.

• A) $10.00
• B) $ 7.50
• C) $ 5.00
• D) $ 2.50
• E) $ 1.50

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Definitions:

Enhancing Control

Strategies or practices aimed at increasing an individual's authority or influence over their own actions or environment.

Social Support

The perceived or actual assistance and encouragement received from others, which can play a critical role in coping with stress.

Imageability

The ease with which an idea or concept can be visualized or imagined.

Personal Space

The physical area surrounding an individual that is considered personal or private, into which others cannot intrude without causing discomfort.