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BigStar Group is growing rapidly since its initial IPO launched in 2017. As of the close...

BigStar Group is growing rapidly since its initial IPO launched in 2017. As of the close of business today its stock price has moved up 20% since the first year. The original offering price of each share was $36/per share. The company’s after-tax share value was reported by Webull as $ 350/share. Calculate the P/E ratio.

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Answer #1

P/E Ratio = Market Value per Share / Earning Per Share

Here,

Market Value Per Share = Offer Price + Change in share price

= $ 36 + 20% of $ 36

= $ 43.2 Per Share

Earnig per Share = $ 350 Per Share

Hence,

P/E Ratio = $ 43.2 / $ 350

= 0.123428571

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