To determine the PE (Price to Earnings) ratio, we use the formula:
[tex]\[ \text{PE Ratio} = \frac{\text{Closing Price}}{\text{Earnings per Share}} \][/tex]
Given:
- Earnings per Share (EPS) = [tex]$1.80
- Closing Price = $[/tex]40
Substitute these values into the formula:
[tex]\[ \text{PE Ratio} = \frac{40}{1.80} \][/tex]
When we divide 40 by 1.80, we get the following result:
[tex]\[ \text{PE Ratio} \approx 22.22 \][/tex]
Comparing this result to the options provided:
A. 72
B. 22
C. 20
D. 7
The closest and therefore the best answer is:
B. 22
