Explore BrainMass

The price-earnings ratio

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

An investor buys a stock for $40 per share and sells it for $45 after one year. Also, at the end of that year, the dividend per stock is $1. The company has 100,000 shares outstanding and a total profit for the year of $500,000. The price-earnings ratio for this firm at the time the stock was sold is?

© BrainMass Inc. brainmass.com September 22, 2018, 8:50 pm ad1c9bdddf - https://brainmass.com/economics/principles-of-mathematical-economics/the-price-earnings-ratio-173851

Solution Preview

Earnings per share= Total Profit/Shares outstanding
=$5 per share

P/E ratio= Price /Earnings per ...

Solution Summary

The price-earnings ratio is delivered.