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22 October, 13:01

During the year, Blitzen Corporation had net income of $200,000, paid $40,000 in dividends to common stockholders, and paid $50,000 in dividends to preferred shareholders. The weighted average number of shares outstanding for the year was 40,000 shares, and Blitzen Corporation's common stock was selling for $35 per share on the New York Stock Exchange at the end of the year. Blitzen Corporation's price-earnings ratio is Select one: a. 5 times. b. 12.73 times. c. 7 times. d. 8.75 times. e. 9.33 times.

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  1. 22 October, 14:45
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    e. 9.33 times

    Explanation:

    Data provided as per the given question

    Price of share = $200,000 and $50,000

    Earning per share = $40,000

    The calculation of price-earnings ratio is shown below:-

    Price earning ratio = Price of share : Earning per share

    = ($200,000 - $50,000) : $40,000

    = $3.75 per share

    Therefore price earning ratio

    = $35 : $3.75

    = 9.33 times
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