1. Rockwell Paper Company had earnings after taxes of $580,000 in the year 2007 with 400,000 shares of common stock outstanding. On January 1, 2008, the firm issued 35,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 25 percent.

a. Compute earnings per share for the year 2007.

b. Compute earnings per share for the year 2008.