QUIZLET At year end, Tangshan China Company's balance sheet shows 2,000,000 shares of common stock outstanding. Next year, Tangshan is projecting that it will have net income of $2.0 million. If the average P/E multiple in Tangshan's industry is 15, what should be the price of Tangshan's stock

$15

Explanation:

The computation of the price of the stock is shown below:

Price of the stock = Earning per share × price earning ratio

where,

Earning per share

= Net income ÷ number of common stock outstanding shares

= $2,000,000 ÷ 2,000,000

= $1 per share

And, the price earning ratio is 15

So, the price of the stock is

= $1 × $5

= $15