FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,320,000 $660,000 Issue preferred $1 stock, $10 par 1,100,000 Issue common stock, $5 par 1,320,000 880,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $396,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 0.60 v Earnings per share on common stock Plan 2 2.30 x Earnings per share on common stock %24 %24
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Transcribed Image Text:Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,320,000 $660,000 Issue preferred $1 stock, $10 par 1,100,000 Issue common stock, $5 par 1,320,000 880,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $396,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 0.60 v Earnings per share on common stock Plan 2 2.30 x Earnings per share on common stock %24 %24
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