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Calculating the Relevant Multiple

Assuming the companies selected are reasonably comparable to the subject firm, then using the average (or median) multiple may be a reasonable estimate of the valuation multiple to apply to the subject firm. The P/E and P/B multiples for each of the comparable firms are stored in the pharma object. For this exercise, calculate the average of each of those metrics.

This exercise is part of the course

Equity Valuation in R

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Exercise instructions

  • Print contents of pharma data object.
  • Calculate the average for all the metrics in pharma (i.e., columns 2 through 4) using the colMeans() command.

Hands-on interactive exercise

Have a go at this exercise by completing this sample code.

# Show contents of pharma
___

# Calculate average multiples
multiples <- colMeans(___, na.rm = TRUE)
multiples
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