A company has net income of $2,800,000.It also has 400,000 weighted-average common shares outstanding and a price-earnings ratio of 20.What is the market value per share of this company's stock?
A)$2.85
B)$140
C)$20,000
D)$.35
E)$2,857.14

Question

Quizplus · Accepted Answer

The market value per share is calculated by dividing the net income by the number of shares to get the earnings per share (EPS), then multiplying the EPS by the price-earnings ratio. EPS = $2,800,000 / 400,000 = $7. Market value per share = $7 * 20 = $140.

A Company Has Net Income of $2,800,000