You are contemplating selling your family business. The company had $62 in earnings last year but those earnings have to be adjusted for a one-off cost relating to a lawsuit settlement of $100. The earnings, adjusted for the one-off cost, are expected to grow 5% for the next fiscal year.

According to an investment bank you've hired as your advisor, similar companies have sold at a forward P/E multiple of 11x. Based on the comparable companies, what can you expect the sales price to be?

Answer rating: 100% (QA)

ANSWER Solution i Calculation of sale price of stock In the given case we shall first calculate ... View the full answer