Question
Sorenson Co., is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% Bonds (at face) - $600,000 Issue $10
Sorenson Co., is considering the following alternative plans for financing the company:
| Plan 1 | Plan 2 | |
| Issue 10% Bonds (at face) | - | $600,000 |
| Issue $10 par Common Stock | $900,000 | $300,000 |
Income tax is estimated at 40% of income.
Sorenson Co., is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% Bonds (at face) - $600,000 Issue $10 par Common Stock $900,000 $300,000 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 $225,000. Round your answers to two decimal places.
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Internal Auditing Assurance And Advisory Services
Authors: Kurt R. Reding, Paul J. Sobel, Urton L. Anderson, Michael J. Head, Sridhar Ramamoorti, Mark Salamasick, Cris Riddle
3rd Edition
0894137409, 978-0894137402
