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    Computation of the stock price

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    (See attached file for full problem descriptions with financial information)

    1. Compute the stock price for Cain if it sells at 18 times earnings per share and EBIT is 40,000

    2. Calloway cab company determines its break-even strictly on the basis of csh expenditures related to fixed cost. Its total fixed cost are 400,00, but 20% of this value is represented by depreciation. Its contribution margin(price minus variable cost) for each unit is 3.60. How many units does the firm need to sell to reach the cash break even point?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:15 pm ad1c9bdddf
    https://brainmass.com/business/accounting/computation-stock-price-example-problem-52833

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    Solution Summary

    This provides the steps to compute the stock price.

    $2.19

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