Use the Information for the Question(s)below

question 25

Essay

Use the information for the question(s)below.
During the most recent fiscal year,KD Industries had revenues of $400 million and earnings of $30 million.KD has filed a registration statement with the SEC for its IPO.Before it is offered,KD's investment bankers would like to estimate the value of the company using comparable companies.The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public.In each case,the ratios are based upon the IPO price.
-Based upon the price/earnings ratio,what would be a reasonable value for KD?

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Definitions:

Equilibrium

In economics and finance, a state where supply equals demand, and market forces are in balance, resulting in stable prices.

WEBS Portfolios

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Passively Managed

An investment strategy that involves mimicking the performance of a market index, typically resulting in lower fees and turnover rates compared to active management.

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