-What Was the Price-Earnings Ratio for the Prior Year?
A)

question 178

Multiple Choice

$\begin{array}{l}\text { Selected data for the MK Company follow: }\\\\\begin{array} {| l | r | r | } \hline & \text { Current Year } & \text { Prior Year } \\\hline \begin{array} { l } \text { Preferred Shares, 8\% Par } \\\text { Value } \$ 50\end{array} & \$ 250000 & \$ 250000 \\\hline \begin{array} { l } \text { Common Shares, Per Value } \\\$ 10\end{array} & \$ 500000 & \$ 500000 \\\hline \begin{array} { l } \text { Retained Earnings at End of } \\\text { Year }\end{array} & \$ 257000 & \$ 240000 \\\hline \begin{array} { l } \text { Net Income } \\\end{array} & \$ 102000 & \$ 90000\\\hline \begin{array} { l } \text { Dividends Paid on Preferred } \\\text { Shares }\end{array} & \$ 20000 & \$ 20000\\\hline \begin{array} { l } \text { Dividends Paid on Common } \\\text { Shares }\end{array} & \$ 65000 & \$ 60000 \\\hline \begin{array} { l } \text { Qouted Market Price per } \\\text { Common Share at Year End }\end{array} &\$25&\$20 \\\hline\end{array}\end{array}$
-What was the price-earnings ratio for the prior year?

• A) 11.1 to 1.
• B) 12.2 to 1.
• C) 14.3 to 1.
• D) 15.8 to 1.

Recognize complicating factors in capital investment analysis including qualitative and quantitative considerations.

Interpret present value and future cash flow calculations using present value tables.

Determine the internal rate of return for different investment opportunities.

Identify and disregard sunk costs in capital investment analysis.

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Definitions:

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A former Turkish empire that was founded about 1300 by Osman and reached its peak during the 16th and 17th centuries.

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Non-military individuals who are injured or killed in a conflict or in a tragic event.

Arms Race

a competition between nations for superiority in the development and accumulation of weapons, especially between the Cold War superpowers.

Trade Territory

A geographic area where a company or country has exclusive rights or advantages for conducting commercial activities.