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Advanced Problems 18. Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of S132.000.
Advanced Problems 18. Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of S132.000. The separate cap structures for Sterling and Royal are shown here: ital Sterling Royal Debt 1296 Common stock, $5 pr. Total Common shares $ 660,000 Debt @12% 440,000 Common stock, $5 par. 1,100,000 Total. 220,000 880.000 $1,100,000 ..176,000 1,1 88,000 Common shares.. 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' earn- ings per share. Assuming a P/E ratio of 22 for each company. what would its stock price be
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