BVI Corporation had net income of $1600000 and paid dividends to common stockholders of $400000 in 2021.The weighted average number of shares outstanding in 2021 was 500000 shares.BVI Corporation's common stock is selling for $40 per share on the NASDAQ.BVI Corporation's price-earnings ratio is

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings per share (EPS):

EPS = (Net Income - Preferred Dividends) / Weighted Average Common Shares Outstanding
EPS = ($1,600,000 - $0) / 500,000
EPS = $3.20

Next, we can use the current market price per share and the EPS to calculate the price-earnings ratio (P/E ratio):

P/E ratio = Market Price per Share / EPS
P/E ratio = $40 / $3.20
P/E ratio = 12.5 times

Therefore, the answer is B) 12.5 times.

BVI Corporation Had Net Income of $1600000 and Paid Dividends