Answer Happy

Problem 2 Company Zap Tech InfoRock Lo Software Zap Tech InfoRock Lo Software Primary shares Price/Share Net Income #Options Value/option 100 500 80 Market Cap $20 $6 $5 Net Income PE Ratio $100 $150 $20 10 80 20 $10 $1.50 $0.50 Diluted EPS Diluted PE Total Equity Valu Modified PE 2. You have been asked to analyze three technology companies and have been providedwith the following information on the companies: Company Zap Tech InfoRock Primary shares outstanding Price/share Net Income $100 $150 $20 100 500 80 $20 $6 $5 Number of Options Value per Outstanding option 10 80 20 $10.00 $1.50 $0.50 Lo Software If you assume that the three companies have the same expected growth rate in net immeand share the same return on equity and cost of equity, which of the three companies would you consider the cheapest? Explain why. (20 points)