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sterling optical and royal optical both make glass frames and each is able to generate earnings...

sterling optical and royal optical both make glass frames and each is able to generate earnings before interest and taxes of $102,600. The seperate capital structures for sterling and royal are shown:

STERLING
Debt @ 9% - $684,000
common stock, $5 par - 456,000
Total - $1,140,000
common shares - 91,200

ROYAL
Debt @ 9% - $228,000
common stock, $5 par - 912,000
total - $1,140,000
common stock - 182,400

A. compute earnings per share for both firms. assume a 20% tax rate. round to 2 decimal places.

Earnings per share?
Sterling -
royal -

B. in part A, you should have gotten the same answer for both companies' earnings per share. Assuming a P/E ratio of 24 for wach company, what would its stock price be? (do not round intermediate calculations. round 2 decimal places.)

Stock price? -

C. now as part of your analysis, assume the P/E ratio would be 18 for the risker company in terms of heavy debt utilization in the capital structure and 20 for the less risky company. What would the stock proces for the two firms be under these assumptions? NOTE: Although interest rates also would likely be different based on risk, we will hold them constant for ease of analysis. do not round intermediate calculations. Round your answers to 2 decimal places.

Stock price?
Sterling -
royal -
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