Question

A stock has a Price/Earnings Ratio (P/E) of 4.5. Earnings per share (EPS) of these stocks is 8. What is the stock’s market value? $14 $25  $36 $81 $40

Answer 1

$36

Step-by-step explanation:

Correct

Answer 2

The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings.

The Price/Earnings Ratio (P/E Ratio) can be calculated as Market Value/Earnings per Share.

P/E = MV/EPS
Substituting the values we have:
4.5 = MV/8
MV = $36