Fortison Mechanics is a relatively small, privately owned firm. Last year the company had net income of $25,000 and 20,000 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 that is publicly traded had a price/earnings ratio of 12.0. Using only the information given, what is the estimated market value of one share of Fortison's stock?

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The Answer of Fortison Mechanics is a relatively small, privately owned firm. Last year the company had net income of $25,000 and 20,000 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 that is publicly traded had a price/earnings ratio of 12.0. Using only the information given, what is the estimated market value of one share of Fortison's stock?

Fortison Mechanics Is a Relatively Small, Privately Owned Firm