During 2012 the Brook Corporation and the River Corporation reported net incomes of \(\$ 38,000\) and \(\$ 21,000\), respectively. Both companies had 8,000 shares of common stock issued and outstanding. The market price per share of Brook's stock was \(\$ 43\), while River's sold for \(\$ 32\) per share.

Required

a. Determine the P/E ratio for each company.

b. Based on the P/E ratios computed in Requirement \(a\), which company do investors believe has the greater potential for growth in income?