Smith Co. is considering the following alternative plans for financing the company:

Plan I Plan II

Issue 10% Bonds (at face) - $1,000,000

Issue $10 Common Stock $3,000,000 $2,000,000

Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

	Type 1	Type 2
Earnings before bond interest and income tax
Bond interest expense
Earnings before income tax
Income tax 40%
Net income
Dividends on preferred stock
Earnings available for common stock
Number of common shares
Price of common shares