18. Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of $120,000. The separate capital structures for Sterling and Royal are shown below: Sterling Royal Debt @ 1 2% ................................ $ 600,000 Debt @ 1 2% .......................... $ 200,000 Common stock, $5 par ................ 400,000 Common stock, $5 par .......... 800,000 Total ......................................... $1 ,000,000 Total ................................... $1 ,000,000 Common shares .......................... 80,000 Common shares .................... 1 60,000 a. Compute earnings per share for both firms. Assume a 25 percent tax rate. b. In part a, you should have gotten the same answer for both companies