Problem 7/8/9/10 Michelle Townsend owns stock in National Computers. Based on information in its annual report, National Computers has reported after-tax earnings of $9,700,000 and has issued 7,000,000 shares of common stock. The stock is currently selling for $32 a share.

7. Calculate the earnings per share for National Computers.

8. Critical Thinking: Based on your results in #7. Explain what the earnings per share might indicate if last years earnings per share were $1.67 per share. Assume the shares outstanding have not changed.

9. Calculate the price-earnings (PE) ratio for National Computers.

10. Critical Thinking: Based on your results in # 9. Assume the industry average for the PE ratio within the industry which National Computers competes is 19. Explain the relationship between National Computers PE ratio and the industry norm. Be sure to identify and explain if this would be viewed as a positive or negative by potential investors.