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Stargate Co. has a PE ratio of 20x. If Stargates EPS is $2, what is the...

Stargate Co. has a PE ratio of 20x. If Stargates EPS is $2, what is the price per share you just found, determine the price-book ratio if Stargate's equity book equity boon value per share is $12.

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Answer #1

PE ratio = Price / EPS

=> Price = PE ratio x EPS = 20 x 2 = $40

Price to book ratio = Price / BVPS = 40 / 12 = 3.33

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