3. Compute Earnings per share for both firms . Assume a 20 percent tax rate . ( Round your answers to 2 decimal places . ) Earnings per Share

Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of $102,600. The separate capital structures for Sterling and Royal are shown here:

Sterling   Royal Debt @ 9% $ 684,000   Debt @ 9% $ 228,000 Common stock, $5 par   456,000   Common stock, $5 par   912,000 Total $ 1,140,000   Total $ 1,140,000 Common shares   91,200   Common shares   182,400

3. Compute Earnings per share for both firms . Assume a 20 percent tax rate . ( Round your answers to 2 decimal places . )Earnings perShareSterling*RoyalDo . In part a, you should have gotten the same answer for both companies’ earnings per share . Assuming a PIE ratio of 24 for each company , what would it’s stock price be ? ( Do not roundintermediate calculations . Round your answer to 2 decimal places . )Stock price*c . Now as part of your analysis , assume the FIE ratio would be 18 for the riskier company in terms of heavy debt utilization in the capital structure and 20 for the less risky company . What would thestock prices 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 roundintermediate calculations . Round your answers to 2 decimal places . )Stock Price*SterlingRoyal

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more