Crystal, Inc. has 500 shares of outstanding $10 par common stock, with a current market value of $20 per share. Earnings per share is $2.00.
The price-earnings ratio is $________.

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Answer:The price-earnings ratio=10

Explanation:Step 1: Determine the price-earnings ratioThe price-earnings ratio can be expressed as;

P/E=MV/E

where;

P/E=price-earnings ratio

MV=market price per share

E=earnings per share

In our case;

P/E=unknown

MV=$20

E=$2

replacing;

P/E=20/2=10

The price-earnings ratio=10