Adairs' shares are currently selling for $75 per share.Next year's dividend is expected to be $1.56;next year's earnings per share are expected to be $4.16.Adairs' P/E ratio is

Question

Quizplus · Accepted Answer

The formula for the P/E ratio is Price per Share/Earnings per Share (EPS).

We know that the current share price is $75 and next year's estimated EPS is $4.16. Therefore, the P/E ratio would be:

P/E ratio = $75 / $4.16 = 18.03

Therefore, the best choice is B, which corresponds to 18.

Adairs' Shares Are Currently Selling for $75 Per Share