Answer:
a. 3.58
Explanation:
the price earning ratio is obtain with the following formula:
[tex]\frac{Market \: Price}{EPS}[/tex]
We are given with the market price, now we need to solve for the EPS
with sales and profit margin we solve for net income. then we divide by the shares outstanding to get the EPS
823,000 sales x 4.2 profit margin = 34.566 net income
now we solve for EPS Earning per share:
[tex]\frac{Income}{Shares}\\\frac{34,566}{7,500} = 4.6088[/tex]
Now we can sovle for price-earnings ratio
[tex]\frac{Market \: Price}{EPS}[/tex]
16.50/4.61 = 3,5791 = 3.58
