Z Space, Incorporated, is a new company and currently has negative earnings. The company’s sales are $1.5 million and there are 135,000 shares outstanding.

If the benchmark price-sales ratio for the company is 5.5, how much will you pay for the stock?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

If the benchmark price-sales ratio for the company is 4.9, how much will you pay for the stock?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

To determine how much you would pay for the stock, we need to use the price-sales (P/S) ratio formula, which relates the market price per share to the company's sales per share. Here's the approach:

### Formula:
\[
\text{Price per share} = \frac{\text{Price-Sales Ratio} \times \text{Total Sales}}{\text{Number of Shares Outstanding}}
\]

Given:
- Total sales = \$1.5 million = \$1,500,000
- Number of shares outstanding = 135,000 shares
- Benchmark price-sales ratio is either 5.5 or 4.9 (we will calculate for both).

### 1. When the P/S ratio is 5.5:
\[
\text{Price per share} = \frac{5.5 \times 1,500,000}{135,000}
\]

\[
\text{Price per share} = \frac{8,250,000}{135,000} = 61.11
\]

So, the price per share would be **\$61.11**.

### 2. When the P/S ratio is 4.9:
\[
\text{Price per share} = \frac{4.9 \times 1,500,000}{135,000}
\]

\[
\text{Price per share} = \frac{7,350,000}{135,000} = 54.44
\]

So, the price per share would be **\$54.44**.

### Final Answer:
- When the price-sales ratio is **5.5**, you would pay **\$61.11** per share.
- When the price-sales ratio is **4.9**, you would pay **\$54.44** per share.

Would you like more details on the concept of price-sales ratios or any further questions? 

Here are some related questions:
1. How does the price-sales ratio compare to other valuation methods like P/E ratio?
2. What factors can influence the price-sales ratio for a company?
3. How does having negative earnings affect stock valuation?
4. What are the risks of investing in a company with negative earnings?
5. Can the price-sales ratio be a reliable metric for all industries?

**Tip:** The price-sales ratio is particularly useful for valuing companies with negative earnings, as traditional metrics like the P/E ratio become inapplicable.

Z Space, Incorporated, is a new company and currently has negative earnings. The company’s sales are $1.5 million and there are 135,000 shares outstanding. If the benchmark price-sales ratio for the company is 5.5, how much will you pay for the stock? If the benchmark price-sales ratio for the company is 4.9, how much will you pay for the stock?

Learn how to calculate the price per share of Z Space, Inc. based on its sales and a given price-sales ratio. This problem involves financial concepts like the price-sales ratio and is suitable for business or finance students. Example calculations for benchmark ratios of 5.5 and 4.9 are provided.

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