New Metals has depreciation of $28,300,interest expense of $11,400,EBIT of $62,700,a price-earnings ratio of 8.6,a profit margin of 7.2 percent,a tax rate of 21 percent,and 37,500 shares of stock outstanding.What is the market price per share?

Question

Quizplus · Accepted Answer

First, we need to calculate the net income:

EBIT = $62,700 
Interest expense = $11,400 
Depreciation = $28,300

EBT = $22,000 ($62,700 - $11,400 - $28,300) 
Taxes = $4,620 ($22,000 x 0.21)

Net income = $17,380 ($22,000 - $4,620)

Now, we can calculate the earnings per share (EPS):

EPS = $0.463 ($17,380 / 37,500)

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

P/E ratio = 8.6 
EPS = $0.463

Market price per share = $3.98 ($0.463 x 8.6)

Therefore, the correct answer is C) $9.29.

New Metals Has Depreciation of $28,300,interest Expense of $11,400,EBIT of $62,700,a