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Please, help with these problems in the attached problems. I do not know the formula's to use in order to solve these. I do not
Please, help with these problems in the attached problems. I do not know the formula's to use in order to solve these. I do not know how to work these out.
Effect of Financing on Earnings Per Share Three different plans for financing a $7,700,000 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 10% bonds _ _ $3,850,000 Preferred 5% stock, $80 par _ $3,850,000 1,925,000 $7,700,000 3,850,000 1,925,000 $ 7,700,000 $ 7,700,000 $ 7,700,000 Common stock, $7.70 par Total Instructions: 1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $15,400,000. Round your answer to the nearest cent if rounding is required. Plan 1 $ per share Plan 2 $ per share Plan 3 $ per share 2. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $7,315,000. Round your answer to the nearest cent if rounding is required. Earnings per share of common stock Plan 1 $ per share Plan 2 $ per share Plan 3 $ per shareStep by Step Solution
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