Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of $$146,000.$ The separate capital structures for Sterling and Royal are shown here:

Sterling Royal

Debt @ $10\%$ $ $876,000$ Debt @ $10\%$ $ $292,000$

Common stock, $$5$ par $584,000$ Common stock, $$5$ par $1,168,000$

Total $ $1,460,000$ Total $ $1,460,000$

Common shares $116,800$ Common shares $233,600$

Compute earnings per share for both firms. Assume a $25$ percent tax rate.

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

In part a$,$ you should have gotten the same answer for both companies$$ earnings per share. Assuming a price$-$earnings $($P$/$E$)$ ratio of $19$ for each company, what would its stock price be$?$

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.

Now as part of your analysis, assume the P$/$E ratio would be $13$ for the riskier company in terms of heavy debt utilization in the capital structure and $24$ 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.$)$

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.