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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
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Answer #1

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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