1. The directors of a company about to be formed are considering three alternatives for raising K50,000,000 to establish the enterprise. These are, by issuing:

1. ordinary K10par shares for K50,000,000

2. ordinary K10par shares for K40,000,000

and 8%, K10par preferred stock 10,000,000

3. ordinary K10par shares for K31,000,000

8%, K10par preferred stock 4,000,000

and 8% bonds for 15,000,000

The directors expect a 20% return on investment before interest and taxes. They are also desirous of transferring from profits to retained earnings K3,000,000 each year.

Assuming a tax rate of 35%, prepare a statement showing the profit and dividend available for ordinary shareholders for each of the financing alternatives.