Problem $5-26($Algo$)$ Operating leverage and ratios $[$LO$5-6]$

Ms$.$ Gold is in the widget business. She currently sells $1\mathrm{.}7$ million widgets a year at $$7$ each. Her variable cost to produce the widgets is $$5$ per unit, and she has $$1,680,000$ in fixed costs. Her sales$-$to$-$assets ratio is seven times, and $40$ percent of her assets are financed with $9$ percent debt, with the balance financed by common stock at $$10$ par value per share. The tax rate is $40$ percent.

Her sister$-$in$-$law, Ms$.$ Silverman, says Ms$.$ Gold is doing it all wrong. By reducing her price to $$6\mathrm{.}00$ a widget, she could increase her volume of units sold by $40$ percent. Fixed costs would remain constant, and variable costs would remain $$5$ per unit. Her sales$-$toassets ratio would be $8\mathrm{.}0$ times. Furthermore, she could increase her debt$-$to$-$assets ratio to $50$ percent, with the balance in common stock. It is assumed that the interest rate would go up by $1$ percent and the price of stock would remain constant.

a$.$ Compute earnings per share under the Gold plan.

Note: Round your answer to $2$ decimal places.

Earnings per share

b$.$ Compute earnings per share under the Silverman plan.

Note: Round your answer to $2$ decimal places.

Earnings per share