The Yarn Outlet has net income of $87,400 for the year with 6,500 shares of stock outstanding.Big Knitter is a similar firm with similar growth opportunities that has 8,400 shares of stock outstanding with a market price of $9.34 a share and earnings per share of $.86.What is the estimated value of the Yarn Outlet?
A)$1,016,279
B)$837,040
C)$1,142,105
D)$751,620
E)$949,205

Question

Quizplus · Accepted Answer

Yarn Outlet value = $9.34 / $.86 × $87,400 = $949,205

The Yarn Outlet Has Net Income of $87,400 for the Year