Julie Smith, an analyst with ABC Company, has collected the following data about the firm:
EBITDA = $3.5 million
Tax rate = 35%
Debt outstanding = $3 million
Cost of debt = 10.5%
Cost of common equity = 14%
Shares of stock outstanding = 900,000
BV of the stock per share = $13
The firm’s product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends.
Calculate the firm’s earning per share, assuming depreciation & amortization costs of $800,000 per year. Show your calculations.