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Alternative Financing Plans Folmar Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,360,000 $680,000 Issue

Alternative Financing Plans

Folmar Co. is considering the following alternative financing plans:

Plan 1 Plan 2
Issue 10% bonds (at face value) $1,360,000 $680,000
Issue preferred $1 stock, $10 par 1,130,000
Issue common stock, $5 par 1,360,000 910,000

Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming income before bond interest and income tax is $408,000.

Enter answers in dollars and cents, rounding to the nearest cent.

Plan 1 $ Earnings per share on common stock
Plan 2

$ Earnings per share on common stock

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