Mutiple choice

15

Acme Widget, Inc. has 1,000 shareholders who own a total of one million shares of its common stock. The stock currently sells for $85 per share. The company earned $5 million after taxes. The annual dividend is $0.50 per share. The firm has assets of $125 million and liabilities of $25 million. What is the P-E ratio?

A.

10

B.

11

C.

13

D.

17

E.

20

EPS = $5 million/1 million = $5; P/E = $85/$5 = 17