In 2013,ABC Corporation had total earnings of $200 million and 40 million shares of the corporation's stock were outstanding.If the price-earnings ratio for ABC is 20,then what is the price of a share of its stock?
A)$5
B)$10
C)$80
D)$100

Question

Quizplus · Accepted Answer

The price-earnings ratio is calculated as the price per share divided by the earnings per share (EPS). The EPS is $200 million / 40 million shares = $5. With a P/E ratio of 20, the price per share is 20 * $5 = $100.

In 2013,ABC Corporation Had Total Earnings of $200 Million and 40