Alternative financing plans OBJ. 1 Brower Co. is considering the following alternative financing plans:

Plan 1 Plan 2 Issue 10% bonds (at face value) $4,000,000 $2,500,000 Issue preferred $2.50 stock, $25 par — 3,000,000 Issue common stock, $10 par 4,000,000 2,500,000 Income tax is estimated at 40% of income.

Determine the earnings per share of common stock, assuming income before bond interest and income tax is $2,000,000.