Please teach me how to answer the following question:

Harry Bright is updating research reports on two well-established consumer companies before first quarter 2020 earnings reports are released. His supervisor, Katy Johnson, has asked Bright to use market-based valuations when updating the reports. Blue Cola is a manufacturer and distributor of soft drinks and recently acquired a major water bottling company in order to offer a broader product line. The acquisition will have a significant impact on Blue Cola's future results. Do It is a U.S. retail distributor of products for home improvement, primarily for those consumers who choose to do the work themselves. The home improvement industry is cyclical; the industry was adversely affected by the recent downturn in the economy, the level of foreclosures, and slow home sales. Although sales and earnings at Do It weakened, same store sales are beginning to improve as consumers undertake more home improvement projects. Poor-performing stores were closed, resulting in significant restructuring charges in 2010.

Before approving Bright's work, Johnson wants to discuss the calculations and choices of ratios used in the valuation of the companies. The data used by Bright in his analysis are

	Blue Cola	Do It
2010 earnings per share (EPS)	$3.44	$1.77
2011 estimated EPS	$3.50	$1.99
Book value per share end of year	$62.05	$11.64
Current share price	$65.50	$37.23
Sales (billions)	$32.13	$67.44
Free cash flow per share	$2.68	$0.21
Shares outstanding end of year	2,322,034,000	1,638,821,000

The most appropriate price-to-earnings ratio to use in the valuation of Blue Cola is closest to

Responses

A 19.04

B 24.44

C 18.71