Carter's Books,Inc

question 9

Multiple Choice

Carter's Books,Inc.has net income of $75,000 and a plowback ratio of 80 percent.There are 30,000 shares of stock outstanding at a market price of $25.50 a share.What is the price-earnings ratio?

• A) 6.9
• B) 8.2
• C) 9.7
• D) 10.2
• E) 11.6

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset's value decreases at double the rate of traditional straight-line depreciation.

Book Value

The original cost of an asset minus accumulated depreciation.

Scrap Value

The estimated resale value of an asset after its useful life is over and it can no longer be used for productive purposes.

Monthly Rates

Interest or other rates measured or applied over a one-month period, commonly used in loans, leases, or savings accounts.