Alternative Financing Plans

Frey Co. is considering the following alternative financing plans:

	Plan 1		Plan 2
Issue 10% bonds (at face value)	$1,200,000		$600,000
Issue preferred $1 stock, $10 par			1,000,000
Issue common stock, $5 par	1,200,000		800,000

Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $480,000.

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