The problem states that Swift Company has total assets of $60 million, total liabilities of $45 million, and 1,000,000 shares of common stock outstanding. Tangshan projects a net income of $1.5 million. The average P/E multiple in Swift's industry is 15. We need to calculate the price of Tangshan's stock.

1. Problem Description

The problem states that Swift Company has total assets of $60 million, total liabilities of$45 million, and 1,000,000 shares of common stock outstanding. Tangshan projects a net income of $1.5 million. The average P/E multiple in Swift's industry is

1

5. We need to calculate the price of Tangshan's stock.

2. Solution Steps

First, we need to calculate the Earnings Per Share (EPS).

$EPS = \frac{Net Income}{Shares Outstanding}$

$EPS = \frac{1,500,000}{1,000,000} = 1.5$

Next, we can calculate the stock price using the P/E ratio.

$Stock Price = P/E Ratio * EPS$

$Stock Price = 15 * 1.5 = 22.5$

3. Final Answer

The price of Tangshan's stock should be $22.

5

0. So, the answer is a. $22.50