The Charleston Company Is a Relatively Small,privately Owned Firm

question 11

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 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:

Extralinguistic Cue

Non-verbal or outside-the-language signals used in communication, such as body language or tone of voice, that provide context or additional meaning.

Spatial-Relations Intelligence

The ability to visualize and manipulate objects and space in one's mind, a key component of Howard Gardner's theory of multiple intelligences.

Naturalist Intelligence

The ability to recognize, categorize, and draw upon certain features of the environment, as one of Howard Gardner's multiple intelligences.

Heuristics

Problem-solving strategies that use a practical, less precise method for making immediate decisions or finding satisfactory solutions.