a-e

Financial Leaming Systems has 3.3 million shares of common stock outstanding and 148,038 shares of preferred stock. (The preferred pays annual cash dividends of $5.26 a share, and the common pays annual cash dividends of 22 cents a share.) Last year, the company generated net profit (after taxes) of $6,956,963 The company's balance sheet shows total assets of $74 million, total liabilities of $30 million, and $5 million in preferred stock. The firm's common stock is currently trading in the market at $36.51 a share. a. Given the preceding information, find the EPS, P/E ratio, and book value per share. b. What will happen to the price of the stock if EPS rises to $2.75 and the P/E ratio stays where it is? What will happen if EPS drops to $1.19 and the P/E doesn't change? c. What will happen to the price of the stock if EPS rises to \$2.75 and the P/E jumps to 272 times earnings? d. What will happen if both EPS and the P/E ratio drop-to $1.19 and 11.5 times earnings, respectively? e. Comment on the effect that EPS and the P/E ratio have on the market price of the stock a. The firm's EPS is $ (Round to two decimal places.)