Sam is a 50 share shareholder in MOP Inc. that earned $2 million, had 100,000 shares outstanding and a price-earnings ratio of 18. What is the current market value of Sam's investment in MOP Inc.?

Question

Quizplus · Accepted Answer

The earnings per share (EPS) is $2 million / 100,000 shares = $20. With a price-earnings ratio of 18, the price per share is 18 * $20 = $360. Sam's 50 shares are worth 50 * $360 = $18,000.

Sam Is a 50 Share Shareholder in MOP Inc