Question
Folmar Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,840,000 $920,000 Issue preferred $1 stock,
Folmar Co. is considering the following alternative financing plans:
| Plan 1 | Plan 2 | |||
| Issue 10% bonds (at face value) | $1,840,000 | $920,000 | ||
| Issue preferred $1 stock, $10 par | 1,530,000 | |||
| Issue common stock, $5 par | 1,840,000 | 1,230,000 | ||
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 $736,000.
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 st |
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Glencoe Accounting Real World Applications And Connections Advanced Course Audit Tests
Authors: McGraw-Hill
5th Edition
0078462002, 978-0078462009
