Question
Sorenson Co. is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% Bonds (at face) - $80,000 Issue $10
Sorenson Co. is considering the following alternative plans for financing the company:
| Plan 1 | Plan 2 | |
| Issue 10% Bonds (at face) | - | $80,000 |
| Issue $10 par Common Stock | $120,000 | $40,000 |
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $30,000. Round your answers to two decimal places.
| Plan 1 | $ |
| Plan 2 |
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ISO IEC 27001 Lead Auditor Mastering ISMS Audit Techniques
Authors: Dr Tamuka Maziriri
1st Edition
107903160X, 978-1079031607
