P8-6 Effect of financing on earnings per share Three different plans for financing a $5,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 40% of income. Plan 1 Plan 2 Plan 3 $2,500,000 1,250,000 1,250,000 $5,000,000 8% bonds Preferred 4% stock, $100 par Common stock, $5 par Total $2,500,000 2,500,000 $5,000,000 $5,000,000 5,000,000 instructions f common stock, assuming that the income before bond interest and income tax is $1,000,000. 2. Determine for each plan the earnings per share of c tock, assuming that the incom before bond interest and income tax is $300,000. 3. Discuss the advantages and disadvantages of each plan