Tiger Golf Supplies has $21 million in earnings with 6 million shares outstanding. Its investment banker...
Tiger Golf Supplies has $21 million in earnings with 6 million shares outstanding. Its investment banker thinks the stock should trade at a P/E ratio of 27. Assume there is an underwriting spread of 7.8 percent.
What should the price to the public be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Homework Answers
Earnings per share = $21,000,000 / 6,000,000 = $3.50
Stock price (prior to underwriting spread) = P/E x EPS = 27 x $3.50 = $94.50
Price to public = $94.50(1 - 0.078) = $87.13
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