Ulmer Company is considering the following alternative financing plans:

Plan 1
Issue 8% bonds at face value $2,000,000
Issue preferred $1 stock, $15 per share- $0
Issue common stock, $10 par 2,000,000

Plan 1
Issue 8% bonds at face value $2,000,000
Issue preferred $1 stock, $15 per share- $0
Issue common stock, $10 par 2,000,000
Plan 2
Issue 8% bonds at face value $1,000,000
Issue preferred $1 stock, $15 per share- $1,500,000
Issue common stock, $10 par 1,500,000


Income tax is estimated at 35% of income.

Required: Determine the earnings per share of common stock, assuming income before bond interest and income tax is $600,000.

Plan 1 Plan 2

Earnings before bond intrest and income tax _______ _______

Bond Intrest _______ ________

Balance _______ _______

Income Tax ______ _______

Dividends on peferred stock ______ _______

Earnings availabl for common stock _______ _________

Number of common shares _______ ________

Earnings per share on common stock ________ ________