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Estimate the value of a privately-held firm based on the following information: total market value (or...

Estimate the value of a privately-held firm based on the following information: total market value (or capitalization value) of a comparable firm = $500,000; net income of a comparable firm = $100,000; number of shares outstanding for the comparable firm = 50,000; net income for the target firm = $37,500; and number of shares outstanding for the target firm = 25,000.

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Answer #1

Value of target firm = Value of comparable firm*net income of target /net income of comparable

=500000*37500/100000=187500

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