1. As a portfolio manager for a sovereign wealth fund, one of your current tasks is to evaluate the common stock of a company called Puppis Enterprises, a manufacturer of neurotransmitter components. Here are the particulars of both Puppis and the three nearest comparables you can find in the company's industry and sector.
Company
Puppis Enterprises
Carina Co.
Pyxis, Inc.
Volans
Current market price
N/A
$10.50
$29.50
$82.00
Current book value
$100,000,000
$62,500,000
$150,000,000
$375,000,000
Shares outstanding
250,000,000
110,000,000
50,000,000
75,000,000
From these data, and from your use of the method of comparables, the best estimate for the justified price of Puppis Enterprises is:
a.$5.96
b. $6.59
c. $6.88