The stock of Company A is valued at $18.20 per share. The company's earnings for one year amounted to $2.80 per share.
If Company earned $3,360,000 in that year, what was the total value of its stock?
To find the total value of Company A's stock, we need to divide the company's earnings by its earnings per share.
First, we can determine the earnings of the company by multiplying the earnings per share by the total number of shares. We are given that the earnings per share is $2.80, so we can set up the equation:
Earnings = Earnings per Share × Total Number of Shares
$3,360,000 = $2.80 × Total Number of Shares
Now, let's isolate the Total Number of Shares:
Total Number of Shares = $3,360,000 / $2.80
Total Number of Shares ≈ 1,200,000 shares
Since the value of the company's stock is $18.20 per share, we can calculate the total value of the stock by multiplying the stock price by the total number of shares:
Total Value of Stock = Stock Price per Share × Total Number of Shares
Total Value of Stock = $18.20 × 1,200,000 shares
Total Value of Stock = $21,840,000
Therefore, the total value of Company A's stock is approximately $21,840,000.