Pulp Paper Company and Holt Paper Company are each able to generate EBIT of $204,000. The separate capital structures for Pulp and Holt are presented below.

Pulp				Holt
Debt @ 12%		$900,000		Debt @ 12%		$500,000
Common stock		800,000		Common stock		1,200,000
Total		$1,700,000		Total		$1,700,000
Common shares		160,000		Common shares		240,000

a. Compute EPS for both firms (assume a 40 percent tax rate). (Round the final answers to 2 decimal places.)

	Pulp	Holt
EPS	$	$

b. Assuming a P/E ratio of 27 for each firm, what would be each firms share price? (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

	Pulp	Holt
Share price	$	$

c. Assume the P/E ratio would be 22 for the riskier company in terms of heavy debt utilization in the capital structure and 35 for the less risky firm. What would the share price now be for each firm? (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

	Pulp	Holt
Share price	$	$

d. Not available in Connect.