Question: Valuation Using the PE Multiple Nokia Corp. recently traded at $5.80 per share. At that time, earnings per share estimates for the next 12 months

Valuation Using the PE Multiple Nokia Corp. recently traded at $5.80 per share. At that time, earnings per share estimates for the next 12 months were $0.28. In addition, Motorola Solutions Inc. and Ericsson had forward PE ratios of 15.44 and 12.71, respectively.

Required

a. Using Motorola Solutions and Ericsson as comparables, estimate the intrinsic value of Nokia’s equity per share.

b. Does the estimate in part a suggest that Nokia is undervalued or overvalued? Explain.

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