The Charleston Company is a relatively small, privately owned firm. Last year the company had an after-tax income of $15,000 and 10,000 shares were outstanding. The owners were trying to determine the market value for the stock prior to taking the company public. A similar firm, which is publicly traded, had a price/earnings ratio of 5.0. Using only the information given, the market value of one share of Charleston's stock is estimated as:?
A. ?$10.00.
B. ?$7.50.
C. ?$5.00.
D. ?$2.50.
E. ?$1.50.
Answer: B
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