1.) A company has revenues of $40 MM on an annual basis, with a 35% operating margin, interest expense of $1.0 MM, and a tax rate of 35%. In addition to common stock outstanding of 1.0 MM shares @ $10 par, with a market price of $50, and some debt as part of its capital structure, it has preferred stock issues along the following terms: Com Pref stock, Series A 5%, $25 par value; 1.0 MM shares authorized, 300 M outstanding

Calculate: a.) EPS, b.) P/E

Furthermore, if the sector P/E is 17, ceteris paribus*, how would you feel about the stock? Feel good!