Markhem Enterprises is expected to earn $1.34 per share this year.The company has a dividend payout ratio of 40% and a P/E ratio of 18.What should one share of common stock in Markhem Enterprises be selling for in the market?
A)$9.65
B)$14.47
C)$24.12
D)$33.77

Question

Quizplus · Accepted Answer

The price of a share can be calculated using the P/E ratio formula: Price = Earnings per Share (EPS) * P/E ratio. Here, EPS is $1.34 and the P/E ratio is 18. Therefore, Price = $1.34 * 18 = $24.12.

Markhem Enterprises Is Expected to Earn $1