Quack is earning 2/3 of what BVR is so 2/3 X 52.50 = A
I hope that helps!
Suppose you are thinking about buying a share of Quack, Inc. You believe that BVR, Co. is a comparable company in terms of risk and as such can be used to help value Quack, Inc. If the earnings per share for Quack, Inc. is currently $2.00, the earnings per share for BVR is $3.00, and the price-to-earnings ratio for BVR is equal to 17.50, what is the price you would be willing to pay for Quack, Inc.?
a.
$35.00
b.
$11.67
c.
$8.75
d.
$52.50
