Question text

The balance sheets at the end of each of the first two years of operations indicate the following:

20112010Total current assets$600,000$560,000Total investments60,00040,000Total property, plant, and equipment900,000700,000Total current liabilities125,00080,000Total long-term liabilities350,000250,000Preferred 9% stock, $100 par100,000100,000Common stock, $10 par600,000600,000Paid-in capital in excess of par--common stock60,00060,000Retained earnings325,000210,000

If net income is $130,000 and interest expense is $40,000 for 2011, and the market price is $40, what is the price-earnings ratio on common stock (rounded to one decimal place)?

Select one:

a.

14.9

b.

18.4

c.

17.3

d.

19.8