Final answer:
To calculate the price-earnings ratio for Jupiter Explorers, find the total profits by multiplying sales with the profit margin and then determine earnings per share. Finally, divide the market price per share by earnings per share to get the price-earnings ratio, which is approximately 19.91.
Step-by-step explanation:
Calculating the Price-Earnings Ratio
To find the price-earnings ratio (P/E ratio), we need to determine the earnings per share (EPS). This is done by calculating the company's total profit and then dividing it by the number of shares outstanding.
The company's profit is its sales multiplied by its profit margin. The profit for Jupiter Explorers is $10,400 multiplied by the profit margin of 4%, which equals $416 (10,400 x 0.04 = 416).
Next, we calculate the earnings per share by dividing the total profit by the number of shares outstanding, which is $416 / 4,600 shares = $0.0904 per share.
Finally, the P/E ratio is the market price per share divided by earnings per share, which turns out to be $1.80 / $0.0904 = 19.9118, which we can round to 19.91.
The correct answer to the given problem is D. 19.90.