You work for an investment bank and are tasked to estimate the target price for the 2nd ranked firm in a new industry. It has 12.8 million shares outstanding. The industry leader has valuation of 1420 million and is making profit while others are not. You estimate the following equation using historical data from a comparable start up industry. 

Ln MVi = a₀ + a₁ Ln MV1 + a₂ Rank_i + e   where estimated a₁ =0.7 and a₂ = 1.12 

Calculate price (P*) for the company.

Answer rating: 100% (QA)

To calculate the price P for the company using the provided equation Ln MVi a0 a1 Ln MV1 ... View the full answer