Barbur, Inc. reported net income of $10.5625 million. During the year the average number of common shares outstanding was 3.25 million. The price of a share of common stock at the end of the year was $5. There were 500,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. The Price/Earnings Ratio is approximately:

Multiple Choice

• 3.25.

• 1.54.

• 4.09.

• 7.70.