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Find the price-earnings ratio.

The price-earnings ratio (R) is given by:
[tex]\[ R(P, E) = \frac{P}{E} \][/tex]

Given:
Price per share ([tex]\(P\)[/tex]) = \[tex]$32.03
Earnings per share (\(E\)) = \$[/tex]1.25

Calculate the price-earnings ratio and round to the nearest hundredth.

Sagot :

GinnyAnswer
To find the price-earnings ratio (P/E ratio) of a stock, we use the formula

[tex]\[ R(P, E) = \frac{P}{E} \][/tex]

where:
- [tex]\( P \)[/tex] is the price per share of the stock
- [tex]\( E \)[/tex] is the earnings per share

Given:
- The price per share [tex]\( P \)[/tex] is \[tex]$32.03 - The earnings per share \( E \) is \$[/tex]1.25

We substitute these values into the formula:

[tex]\[ R(32.03, 1.25) = \frac{32.03}{1.25} \][/tex]

Next, we compute the division:

[tex]\[ \frac{32.03}{1.25} \approx 25.624 \][/tex]

We are asked to round the result to the nearest hundredth. So, we look at the third decimal place (the thousandths place):

[tex]\[ 25.624 \][/tex]

The third decimal place is 4, which is less than 5. Therefore, we round down to:

[tex]\[ 25.62 \][/tex]

Thus, the price-earnings ratio, rounded to the nearest hundredth, is:

[tex]\[ 25.62 \][/tex]
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