Blitzen Corporation had net income of $200,000 and paid dividends to common stockholders of $50,000 in 2020. The weighted average number of shares outstanding in 2020 was 40,000 shares. Blitzen Corporation's common stock is selling for $35 per share on the New York Stock Exchange. Blitzen Corporation's price-earnings ratio is

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The price-earnings ratio is calculated by dividing the market value per share by the earnings per share (EPS). First, calculate the EPS: $200,000 net income / 40,000 shares = $5 EPS. Then, calculate the price-earnings ratio: $35 per share / $5 EPS = 7 times.

Blitzen Corporation Had Net Income of $200,000 and Paid Dividends