The idea behind Answer is that a stock's price cannot be evaluated in isolation. The method of comparables refers to the valuation of an asset based on the multiples of $$

$($such as a peer$-$group comparison$).$ For example, multiplying a benchmark value of the price$-$to$-$earnings $($P$/$E$)$ multiple by an estimate of a company's earnings per share $($EPS$)$ provides a quick estimate of the value of the company's stock that can be compared with the stock's market price. If Company A$\text{'}$s EPS is $$1\mathrm{.}50$ and an examination of benchmark firms in a peer$-$group comparison suggests a P$/$E of $22$ is appropriate, we will estimate that an appropriate price for Company A$\text{'}$s stock is $...$ that is$,.$ Similarly, multiplying a benchmark value of the price$-$to$-$sales $($P$/$S$)$ multiple by an estimate of a company's sales figure can provide an estimate of the company's stock value. If company $B$ has one billion shares outstanding and revenue of $$5$ billion, and the peer$-$group comparison suggests a $\frac{P}{S}$ of $3\mathrm{.}2$ is appropriate, we will estimate that an appropriate price for Company $B^{\text{'}}$ s stock is $$ Answer $...$ that is$,$ The price$-$tobook $($P$/$B$)$ multiple can be used in a similar way. If the benchmark for Company C$,$ based on the peer$-$group, is P$/$B $=85\mathrm{.}0,$ and Company C$\text{'}$s balance sheet shows $$900$ million in total assets, $$500$ million in total liabilities, no preferred stock and eight hundred million shares of common stock outstanding, we will estimate that an appropriate price for Company C$\text{'}$s stock is $...$ that is$,$ Answer Answer

DCF valuation

:$\text{'}$ : price multiples

$$: similar assets

vdotsvdots: the entire market $$ vdots$$$14\mathrm{.}67$

$$

$$:$22$ divided by $1\mathrm{.}50$

$$:$22$ times $1\mathrm{.}50$

$$:$22$ plus $1\mathrm{.}50$

vdotsvdots$$0\mathrm{.}64$

vdotsvdots$$$16$ billion

vdots$$16\mathrm{.}00$

:$\text{'}3\mathrm{.}2$ times $5$ billion

:vdots$3\mathrm{.}2$ times $(5$ billion divided by $1$ billion$)$

:$\text{'}3\mathrm{.}2$ times $(1$ billion divided by $5$ billion$)$

vdots$$$53\mathrm{.}13$

vdots$$$34,000$

vdots$$$42\mathrm{.}50$ :$\text{'}$$$17\mathrm{.}00$

vdotsvdots:$85\mathrm{.}0$ times $(500$ million divided by $800$ million$)$

:$85\mathrm{.}0$ times $(900$ million divided by $800$ million$)$

: $85\mathrm{.}0$ times $(900$ million minus $500$ million$)$

$$:$85\mathrm{.}0$ times $(900$ million minus $800$ million$)$ divided bv $500$ million :: $85\mathrm{.}0$ times $(900$ million minus $500$ million$)$ divided bv $800$ million