Question: Using the chop shop method, please determine a firm's value for San Francisco, Inc. San Francisco common stock is trading at a total market price
Using the chop shop method, please determine a firm's value for San Francisco, Inc. San Francisco common stock is trading at a total market price of 4 million. For San Francisco, the accounting data are divided into three business segments as given below in the tables. Data for the firm's three segments are as follows: Business segments Segment's ($000) Sales Segment's Assets Segment's ($000) Earnings before Interest and Taxes (EBIT) Consumer wholesale 1000 750 150 Specialty services 1500 700 250 Retirement centers 2200 800 550 Total 4700 2250 950 Industry data for "pure-play" firms have been computed and are summarized as follows: Firm Value/Sales Firm value/Assets Business segments Firm Value/ EBIT Consumer wholesale 0.7 0.75 12 Specialty services 1.1 0.65 10 Retirement centers 0.9 11
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