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    aarjmoo's Avatar
    aarjmoo Posts: 1, Reputation: 1
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    #1

    Sep 29, 2008, 01:40 PM
    M/B and share price
    You are given the following information: Stockholders' equity = $3.75 billion; price/earnings ratio = 3.5; common shares outstanding = 50 million; and market/book ratio = 1.9. Calculate the price of a share of the company's common stock.
    bunnyKutty's Avatar
    bunnyKutty Posts: 60, Reputation: 5
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    #2

    Sep 28, 2009, 06:07 AM

    Book value of shares = 3,750,000,000
    Common shares = 50,000,000
    Book value per share = 3,750,000/ 50,000,000
    = $75

    Market/ book ratio = Market value per share/ bookvalue per share = 1.9
    Market value per share = 1.9 x 75 = $142.50
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