Beta Corporation Had Net Income of $325,000 and Paid Dividends

question 254

Multiple Choice

Beta Corporation had net income of $325,000 and paid dividends to common stockholders of $50,000 in 2014. The weighted average number of shares outstanding in 2014 was 50,000 shares. Beta Corporation's common stock is selling for $45.50 per share on the New York Stock Exchange. Beta Corporation's price-earnings ratio is

• A) 14.0 times.
• B) 7.0 times.
• C) 6.1 times.
• D) 8.3 times.

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Definitions:

Special Account

An account designated for a particular purpose or offering special conditions or privileges.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so the investment grows at an increasing rate.

Compounded Annually

A method of calculating interest in which the accumulated interest is added to the principal at the end of each year, with future interest then calculated on the new total.

Percentage Increase

A measure of the degree to which a quantity has grown in proportion to its initial value, expressed as a percentage.