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 per Share Sterling* Royal Do . 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 round intermediate 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 the stock 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 round intermediate calculations . Round your answers to 2 decimal places . ) Stock Price* Sterling Royal