Question
Frey Co. is considering the following alternative financing plans Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock,
Frey Co. is considering the following alternative financing plans
| Plan 1 | Plan 2 | |||
| Issue 10% bonds (at face value) | $840,000 | $420,000 | ||
| Issue preferred $1 stock, $10 par | 700,000 | |||
| Issue common stock, $5 par | 840,000 | 560,000 | ||
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 $336,000.
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 |
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Financial Accounting
Authors: Robert Libby
6th Edition
0077405641, 978-0077405649
