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Reef Cinema Corporation has a current market price for its stock of $40 per share. The latest annual report showed net income of $2,250,000 and total common stock equity of $15 million. The report also listed 1,750,000 shares of common stock outstanding. No common stock dividends are paid.

a. Calculate Reef Cinema's earnings per share (EPS).

b. Calculate Reef Cinema's price to earnings (P/E) ratio.

c. Calculate Reef Cinema's book value per share.

d. What is Reef Cinema's market to book ratio?

e. Based on this information, does the market believe that the future earning power of Reef Cinema Corporation justifies a higher value than could be obtained by liquidating the firm? Why or why not?

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