Problema Solution
Cleveland corporation has 100,000 shares of common stock outstanding, it's net income is $750,000 and its P/E is 8. What is the company's stock price?
Answer provided by our tutors
Earning Per share 750000/100000 = 7.5
now, PE Ration = MPS/EPS
so, MPS = 8*7.5 = $60
So, Market price of share is $60