=+Folmar Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at

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=+Folmar Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $2,000,000 $1,000,000 Issue preferred $1 stock, $5 par — 1,500,000 Issue common stock, $5 par 2,000,000 1,500,000 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 $800,000.

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Accounting

ISBN: 978-1111001346

23rd Edition

Authors: Carl S. Warren

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