2A2S ARCHER INC. HAS 500,000 SHARES OF $10 PAR VALUE COMMON STOCK OUT...
78.
CSO: 2A2e
LOS: 2A2s
Archer Inc. has 500,000 shares of $10 par value common stock outstanding. For the
current year, Archer paid a cash dividend of $4.00 per share and had earnings per share of
$3.20. The market price of Archer’s stock is $36 per share. The average price/earnings
ratio for Archer’s industry is 14.00. When compared to the industry average, Archer’s
stock appears to be
a.
overvalued by approximately 25%.
b.
overvalued by approximately 10%.
c.
undervalued by approximately 10%.
d.
undervalued by approximately 25%.