Sales = 10,000 units
Sales Price per unit = $10
Variable Cost per unit = $5
Fixed Costs = $10,000
Bonds Outstanding = 15,000
Kd = on Outstanding Bonds = 8%
Tax Rate = 40%
Shares of Common Stock Outstanding = 10,000
Beta = 1.4
Krf = 5%
RPm = 4%
Dividend Payout Ratio = 60%
Growth Rate = 8%

I would like to know how the answer is derived. I have spent all day on this but I am missing something.
Thanks,
dsmondoc

Toni Mills

I have a similiar question. Can someone help?

BigCip

I am not sure what you are asking for exactly?

sharpan

Understanding Price to Sales Ratio


One ratio you can use is Price to Sales or P/S ratio. This metric looks at the current stock price relative to the total sales per share. You calculate the P/S by dividing the market cap of the stock by the total revenues of the company.

You can also calculate the P/S by dividing the current stock price by the sales per share.

P/S = Market Cap / Revenues
or
P/S = Stock Price / Sales Price Per Share

Much like P/E, the P/S number reflects the value placed on sales by the market. The lower the P/S, the better the value, at least that’s the conventional wisdom. However, this is definitely not a number you want to use in isolation. When dealing with a young company, there are many questions to answer and the P/S supplies just one answer.

morgaine300

Is this homework? Sounds like it. You might try posting this on the homework forum -- real investing and finance homework are two different things:
Finance & Accounting - Ask Me Help Desk

sharpan

I think you did not go through the above post before I posted the answer, always try to read the compelete forum before reply.... that makes sense to the receiving and sending end.......

morgaine300

Excuse me? Are you talking to me? I believe I have just a few more posts here than you do. I did read everything in the thread.

I was making a point that homework should go in the homework section, and that things in real life aren't necessarily the same as in a classroom setting. Somehow I think it is I who understands that concept better than you.

You didn't even answer the question. You explained what price to sales is. The question was the price of the stock. It did not ask a ratio. And neither of your equations can even be solved with the given info. There is no P/S, market cap or stock price given in the problem.

And you're telling me I should read before I post? Why don't you try doing the same?