Rocket Corp. earned net income of $153,040 and paid the minimum dividend to preferred stockholders for 2018. Assume that there are no changes in common shares outstanding during 2018. Rocket's books include the following figures:
Preferred Stock-6%, $60 par value; 2,000 shares authorized, 1,000
shares issued and outstanding ........................................................... $ 60,000
Common Stock-$5 par value; 80,000 shares authorized, 48,000 shares
issued, 46,700 shares outstanding ....................................................... 240,000
Paid-In Capital in Excess of Par-Common ........................................... 470,000
Treasury Stock-Common; 1,300 shares at cost (26,000)
Requirements
1. Compute Rocket's EPS for the year.
2. Assume Rocket's market price of a share of common stock is $12 per share. Compute Rocket's price/earnings ratio.