During 2007, Musicland Corporation and Jazz town Corporation reported net incomes of \($62,000\) and \($54,000\) , respectively. Each company had 10,000 shares ofcommon stock issued and outstanding. The market price per share of Musicland’s stock was \($80\) , while Jazz town’s stock sold for \($88\) per share.

Required:

a. Determine the P/E ratio for each company.

b. Based on the P/E ratios computed in Requirement

a, which company do investors believe has more potential for growth in income?