4. Given the following information, calculate the market price per share of common stock. (3pts)...
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4. Given the following information, calculate the market price per share of common stock. (3pts) EPS = $2.50 per share Market/book ratio = 0.8 Shareholders equity $4,000,000 Earnings: (net income) $500,000 5. The Honey Hamburger chain is a relatively small, privately owned corporation. The owner is thinking of taking the firm public and issuing 2,000,000 share of common stock. He is trying to determine what would be the best price that public would probably be willing to pay for the new stock. In 2003, Honey Hamburger had earnings (net income) of $2,500,000. A similar firm in the same industry, which has previously been taken public, has been trading at a price to earnings (P/E) of 12. Using the information given, what price would you estimate the market will be willing to pay for the new shares of Honey Hamburger, Inc.? (3pts)
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