In the previous problem, compute the stock price for Cain Auto Supplies if it sells at 12 times EPS and EBIT is $40,000.

Previous problem

Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below.

Cain Able $ 50,000 Debt @ 10% 100,000 Common stock, $10 par $150,000 Debt @ 10% $100,000 Common stock, $10 par 50,000 Total Total $150,000 Common shares 10,000 Common shares 5,000