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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