You have a business you are considering selling. There are several ways to determine the firm's worth.
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Question:
You have a business you are considering selling. There are several ways to determine the firm's worth. Based on the following data, which method would merit you the most for your business?
- Current annual profits were $2,400,000
- Your current stock is $21.00 per share
- There are 31,000 outstanding shares of stock.
- Your stock has earned $14 this past year, and
- Average net income over five years $820,000
Consider in this calculation,
- Price/Ratio Method,
- Outstanding Share Method, and
- the Conservative Rule of Thumb method.
Please : Show work for each of these methods and identify, based on your work, which method yield the most for your business.
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