Financial Learning Systems has $2\mathrm{.}4$ million shares of common stock outstanding and $104,450$ shares of preferred stock. $($The preferred pays annual cash dividends of $$4\mathrm{.}88$ a share, and the

common pays annual cash dividends of $23$ cents a share.$)$ Last year, the company generated net profit $($after taxes$)$ of $$7,242,775.$ The company's balance sheet shows total assets of $$78$ million,

total liabilities of $$33$ million, and $$5$ million in preferred stock. The firm's common stock is currently trading in the market at $$35\mathrm{.}76$ 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 $$4\mathrm{.}21$ and the P$/$E ratio stays where it is$?$ What will happen if EPS drops to $$1\mathrm{.}67$ and the P$/$E doesn't change?

c$.$ What will happen to the price of the stock if EPS rises to $$4\mathrm{.}21$ and the P$/$E jumps to $17\mathrm{.}6$ times earnings?

d$.$ What will happen if both EPS and the P$/$E ratio drop$$to $$1\mathrm{.}67$ and $7\mathrm{.}7$ times earnings, respectively?

e$.$ Comment on the effect that EPS and the P$/$E ratio have on the market price of the stock.