Question: Sardel Company reported net income of 29 975 for 2010 During

Sardel Company reported net income of $29,975 for 2010. During all of 2010 the company had 1,000 shares of 10%, $100 par, nonconvertible preferred stock outstanding, on which the year’s dividends had been paid. At the beginning of 2010 the company had 7,000 shares of common stock outstanding. On April 2, 2010, the company issued another 2,000 shares of common stock, so that 9,000 common shares were outstanding at the end of 2010. Common dividends of $17,000 had been paid during 2010. At the end of 2010 the market price per share of common stock was $17.50.

1. Compute the basic earnings per share of Sardel Company for 2010.
2. Compute the price/earnings ratio for 2010.

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