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your firm is considering two financing plans. The key information follows: use a 40% tax rate Source of funds Plan A Plan B Long term

your firm is considering two financing plans. The key information follows: use a 40% tax rate

Source of funds Plan A Plan B
Long term Dent $500 @ 6% $2,500 @ 10%
Preferred Stock 50 shares, $2 dividend per share 10 shares, $2 dividend per share
Common Stock 60 shares 15 shares

Draw the Earning Per Share and Earning Before Interest Tax line for each plan on the same set axes. Over what range of Earnings before income tax would you prefer Plan A?

Show in excel if possible

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