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Windswept, Inc

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Windswept, Inc. has 90 million shares of stock outstanding. Their price-earnings ratio for 2011 is 12. What is the market price per share of stock?
A. $57.12 B $59.94 C. $62.82 D. $64.13 E $65.03

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Explanation

Computation of Market Price per Share of Stock:

Price to Earnings Ratio = Market Price per Share/Earnings per Share

So,

Market Price per Share = Price to Earnings Ratio*Earnings per Share

Here,

Earnings Per Share = Net Income / Outstanding Shares

= $481 millions / 90 million shares

Earnings per Share = $5.34

Market Price per Share = 12*$5.34 = $64.13

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