At its peak at the end of 1999, Microsoft had a market cap of $600B. PC sales were booming and most PCs ran on Microsoft software. Revenue was growing 30% per year. The P/E ratio peaked at nearly 80.Ox in 1999. Looking at this chart, what happened in the subsequent 15 years? A. The decline in the P/E ratio canceled out the decline in earnings and this pushed the market cap up. B. Earnings grew and this pushed the market cap up. C. The decline in the P/E ratio more than offset earnings growth and this pushed the market cap down. D. Earnings declined and this pushed the market cap down.

C. The decline in the P/E ratio more than offset earnings growth and this pushed the market cap down.

Explanation:

Market Cap = P/E ratio * Earnings

Market cap is dependent on both the P/E ratio and Earnings as shown by the formula and as shown on the graph, the P/E ratio kept on decreasing which means that for the Market Cap to decrease, the downward pull of the P/E ratio must have overshadowed the growth in earnings such that the Market Cap went down instead of up.

For instance, if the earnings were $40 billion and the P/E ratio was 15, Market Cap would be $600 billion.

If earnings increased to $45 billion but P/E ratio decreased to 10, Market Cap would become $450 billion.

start by isolating the variable on one side by adding 43w^2 to both sides.   the equation will read:

25w^2+5=0

*subtract 5 from both sides*

25w^2=-5

*divide both sides by 25*

w^2=-1/5

*take the square root of both sides*

w=√(-1/5)

the square root of -1 is i.   the square root of 5 remains √5

the answer is i/√5.

hope this

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