The annual report of Salem Cars, Inc., for the year ended December 31, 2018, included the following items (in millions):

Preferred stock outstanding, 3% .......................................... $ 1,000
Net income................................................................................. $ 700
Average number of shares of common stock outstanding..... 500

1. Calculate earnings per share (EPS) and the price-earnings ratio for Salem Cars’ stock. Round to the nearest cent. The price of a share of the company’s stock is $18.

2. How much does the stock market say $1 of Salem Cars’ net income is worth?