1. The target stock price for Babies Inc. is \$25.00, with a benchmark price earnings ratio...

1. The target stock price for Babies Inc. is \$25.00, with a benchmark price earnings ratio (P/E) of 10. What would be its earnings per share? (show work)

1. \$250 per share
2. \$25 per share
3. \$2.50 per share
4. \$0.40 per share

Explanation:

Price earnings ratio = share price/ Earnings per share

Given , Price earnings ratio =10

Share price =\$25

Therefore, 10=\$25/EPS

EPS =\$25/10

EPS =\$2.50

So the answer is Option C. i.e \$2.5 per share

_____×_____

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