Question 4 of 10 3 Points Costen Inc. is a publicly traded company that faces...
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Question 4 of 10 3 Points Costen Inc. is a publicly traded company that faces a cost of capital of 9% and is in stable growth, growing 3% a year. The firm is currently fairly valued, trading at an EV/Sales ratio of 2.1. given its current operating margin and its sales to invested capital ratio of 1.25. You believe that due to increased competition, the operating margin for the firm will be halved in the future, but that the growth rate, sales to capital ratio and the cost of capital will be unchanged. Estimate the new Ev/Sales ratio, given your assumption that margins will be halved. A 0.65 B. 0.81 C. 0.85 D. 1.05 E. 1.25
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