Question

1. If earnings per share of a company is Rs. 5 and the price earning ratio of other similar companies is 4, then the market value of the share of the company would be–
(A) Re. 0•80 (B) Rs. 1•25
(C) Rs. 9 (D) Rs. 20​

Answer 1

Answer:

(D) Rs.20

Step-by-step explanation:

given, earnings per share (EPS) = Rs. 5

Price earning ratio (PE) = Rs. 4

Market price of Share (MPS) = PE X EPS

=4*5

=20

[PE = MPS/EPS]