Quasar Corporation Had Net Income of $300,000 and Paid Dividends

question 48

Multiple Choice

Quasar Corporation had net income of $300,000 and paid dividends to common stockholders of $40,000 in 2015. The weighted average number of shares outstanding in 2015 was 60,000 shares. Quasar Corporation's common stock is selling for $35 per share on the New York Stock Exchange. Quasar Corporation's price-earnings ratio is

• A)5.7 times.
• B)7 times.
• C)14 times.
• D)8.1 times.

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Definitions:

Rental Property

Real estate property that is owned by an individual or entity and rented out to tenants in exchange for monthly rental payments.

Recognized Gain

is the portion of a gain that is subject to taxation under the tax laws after the sale or exchange of an asset.

Basis

The original value or cost of an asset or investment for tax purposes, crucial for calculating gain or loss on disposition.

Like-Kind Exchange

A tax deferment strategy where an asset is exchanged for another similar asset, deferring capital gains taxes.