Question: Using the chop shop method, please determine a firms value for Acapulco , Inc . Whose common stock is trading at a total market price

Using the chop shop method, please determine a firms value for Acapulco, Inc.

Whose common stock is trading at a total market price of 4 million. For Acapulco, the accounting data are divided into three business segments as given below in the tables. Data for the firms three segments are as follows:

Business segments

Segments Sales ($000)

Segments Assets ($000)

Segments Earnings before Interest and Taxes (EBIT)

Consumer wholesale

2300

1900

650

Specialty services

1900

1400

750

Retirement centers

2500

2,100

800

Total

6700

5400

2200

Industry data for pure-play firms have been computed and are summarized as follows:

Business segments

Firm Value/Sales

Firm value/Assets

Firm Value/ EBIT

Consumer wholesale

1.2

1.1

8

Specialty services

0.8

0.7

6

Retirement centers

1.5

1.5

12

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