BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $400,000 in 2022.The weighted average number of shares outstanding in 2022 was 500,000 shares.BVI Corporation's common stock is selling for $40 per share on the NASDAQ.BVI Corporation's price-earnings ratio is

Question

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The price-earnings ratio is calculated as the market price per share divided by the earnings per share (EPS). EPS is calculated as net income divided by the weighted average number of shares outstanding. EPS = $1,600,000 / 500,000 = $3.20. The price-earnings ratio = $40 / $3.20 = 12.5 times.

BVI Corporation Had Net Income of $1,600,000 and Paid Dividends