Question
Sorenson Co. is considering the following alternative plans for financing the company: Issue 10% bonds (at face) Issue $10 par common stock - $450,000 Plan
Sorenson Co. is considering the following alternative plans for financing the company:
| Issue 10% bonds (at face) Issue $10 par common stock - $450,000 | Plan 1 | Plan 2 |
| Issue 10$ par common stock | - | 300,000 |
| 450,000 | 150,000 |
Income tax is estimated of 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 $114,000. Round your answers 2 Decimal places.
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Auditing An Assertions Approach
Authors: G. William Glezen, Donald H. Taylor
7th Edition
047113421X, 978-0471134213
