Alternative Financing Plans

Owen Co. is considering the following alternative financing plans:

Plan 1 Plan 2

Issue 7% bonds (at face value) $5,000,000 $3,400,000

Issue preferred $1 stock, $20 par 3,600,000

Issue common stock, $25 par 5,000,000 3,000,000

Income tax is estimated at 40% of income.

Determine theearnings per share of common stock, assuming income beforebondinterest and income tax is $750,000.

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

Plan 1 $ Earnings per share on common stock

Plan 2 $ Earnings per share on common stock