Question
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,440,000 $720,000 Issue
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,440,000 $720,000 Issue preferred $1 stock, $10 par 1,200,000 Issue common stock, $5 par 1,440,000 960,000 Income tax is estimated at 40% of income. Determine the earnings per share on the common stock, assuming that income before bond interest and income tax is $1,152,000. Enter answers in dollars and cents, rounding to two decimal places.
Plan 1 $ 2.10 Earnings per share on common stock
Plan 2 $ ____Earnings per share on common stock
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