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Hallowell Inc. has free cash flow of $2.5 million and 1.25 million shares outstanding. If you believe the price to cash flow ratio for this company should be 11, what is the highest price you should pay for the stock

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bhuvna789456

The highest price for the stock is  $22.00.

Explanation:

 Given:

  • Hallowell Inc has a free cash flow of $2.5 million and 1.25 million shares.
  • The cash flow ratio for the company is 11.

Solution:

For one stock the cash flow ratio is 11.

Then the highest price we should pay is $22.00.

So we should pay $22.00 for one stock.

Therefore the highest price we should pay for the stock is $22.00          

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