The balance sheet of the Delta Corporation shows a capital structure as follows:
|
Current liabilities
|
$ 0
|
|
Bonds (6% interest)
|
100,000
|
|
Common stock
|
900,000
|
|
Total claims
|
$1,000,000
|
Its rate of return before interest and taxes on its assets of $1 million is 20 percent. The value of each share (whether market or book value) is $30. The firm is in the 50 percent tax bracket. Calculate its earnings per share.