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Effact of Financing on Earnings Per Share Three different p ans or financing a $7,200.000 corporation are under consideration by its organizers. Under each of
Effact of Financing on Earnings Per Share Three different p ans or financing a $7,200.000 corporation are under consideration by its organizers. Under each of the oing plans the securities will be issued at their par or ace amount, and the income tax rate is estimated at 40% of income. Plan 1 Plan 2 Plan 3 10% bonds Preferred 10% stock, S100 par Common stock, $7.2 par $3,600,000 1,900,000 $7,200,000 3,600,000 1,800,000 $7,200,000 7,200,000 $7.200,000 $3,600,000 Total Round the answers to nearest cent. 1. Determine for each plan the carnings per share of common stock, assuming that the income before band interest and income tax is $14,400,000. Earnings per share of common stock Plan 1 per share per share per share Plan 2 Plan 3 2. Datermine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $6,840,000. Earnings per share of common stock Plan 1 Plan 2 Plan 3 3. Regarding the three plans, which of the following statements is true? Plan 3 per share per share par share a dividend to dividend can be
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