The Charleston Company Is a Relatively Small, Privately Owned Firm

Multiple Choice

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.