Question

An investor is considering investing in Boxie’s Bed & Breakfast, Corp. During the last year, the firm’s income statement provided net income of $4.8 million and its balance sheet demonstrated common stock dividend value of $2.2 million. Boxie’s Bed & Breakfast had 10 million average shares of common stock outstanding in the market. If the common stock’s market price per share is $9.00, what is Boxie’s Bed & Breakfast EPS and P/E ratio?

Group of answer choices

$.70 per share EPS and $12.86 PE

$.60 per share EPS and $13.45 PE

$.70 per share EPS and $13.27 PE

$.80 per share EPS and $11.10 PE

Answer 1

Net income = $4.8 million

Average number of common shares outstanding = 10 million

Market price per share = $9
Common Stock dividend = $2.2 million
Earning per share = (Net income +Common Stock dividend) / Average number of common shares outstanding

= (4.8+2.2)/10

= 7/10

= $0.70

Price earning ratio = Market price per share/ Earning per share

= 9/0.70

= $12.86

Boxie’s Bed & Breakfast EPS and P/E ratio= $.70 per share EPS and $12.86 PE

First option is correct.

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