ZuoTi.Pro
Question

Assume we want to use a relative valuation approach to value a private firm. We have identified a similar public company...

Assume we want to use a relative valuation approach to value a private firm. We have identified a similar public company that has a PE ratio of 12.3 and a PEG ratio of 1.4. The private firm just reported $977,300 in earnings and analysts think these earnings will grow at a 6% rate going forward. Using the PEG ratio what is the estimated value of the private firm's value?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

PEG ratio = 1.4

(Price/ Earning ) / Growth = 1.4

Price/Earning = 1.4 * Growth

Price = 1.4 * 6 * Earning

Price = 1.4 * 6 * $977300

Private firm's value = $8209320

0 0
Add a comment
Know the answer?
Add Answer to:
Assume we want to use a relative valuation approach to value a private firm. We have identified a similar public company...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • If I want to value a stock using relative valuation with its earnings per share from...

    If I want to value a stock using relative valuation with its earnings per share from the last twelve months, which multiple do I need to compute for the company's comparables? A Forward PE B PEG C Trailing PE D EV/EBITDA E EV/FCFF

  • P7-17 (similar to) Free cash flow valuation Nabor Industries is considering going public but is unsure...

    P7-17 (similar to) Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the firm's common stock value. The firm's CFO has gathered data for performing the valuation using the free cash flow valuation model. The firm's weighted average cost of capital is 14%, and it has $1,800,000...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFs) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Triptych Food Corp. has an expected net...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Charles Underwood Agency Inc. has an...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Blur Corp. has an expected net...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Blur Corp. has an expected net...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Charles Underwood Agency Inc. has an...

  • The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are...

    The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value-added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you've done in previous problems, but it focuses on a firm's free cash flows (FCFS) instead of its dividends. Some firms don't pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Sixty Second Avenue Inc. has an expected...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT