The Target Company Has Sales of $2 Million, Net Income

question 10

Multiple Choice

The target company has sales of $2 million, net income of $1 million, and cash flows to equity of $1.1 million.The industry P/E ratio is 16.5.What is the valuation of the target company?

• A)$16.5 million
• B)$33 million
• C)$18.15 million
• D)$10 million

---

Definitions:

Ethical Reasons

Considerations based on principles of right and wrong behavior, guiding decisions and actions to align with moral values.

Disconfirms

To provide evidence or information that counters, disproves, or contradicts a belief, hypothesis, or proposition.

Proves Theories

The process of validating hypotheses and theories through rigorous testing and evidence gathering in scientific research.

Hypothesis

A suggested theory formulated from minimal evidence, intended to initiate more detailed exploration.