Alternative financing plansFrey co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 5% bonds (at face value) $6,000,000 $2.000,000 Issue preferred $1 stock. $20 par - 6,000,000 Issue common stock. $25 par 6,000,000 4,000,000 Income tax is estimated at 40% of income.Determine the earnings per share of common stock, assuming thatincome before bond interest and income tax is $800,000.

Alternative financing plansFrey co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 5% bonds (at face value) $6,000,000 $2.000,000 Issue preferred $1 stock. $20 par - 6,000,000 Issue common stock. $25 par 6,000,000 4,000,000 Income tax is estimated at 40% of income.Determine the earnings per share of common stock, assuming thatincome before bond interest and income tax is $800,000.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 1PEA

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Simonelli Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds (at face value) $5,000,000 4,000,000 Issue preferred $2.00 stock, $20 par — 2,000,000 Issue common stock, $25 par 5,000,000 4,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $1,000,000.
Brower Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $4,000,000 $2,500,000 Issue preferred $2.50 stock, $25 par Issue common stock, $10 par 3,000,000 4,000,000 2,500,000 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 $2,000,000.
Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock, $10 par — 700,000 Issue common stock, $5 par 840,000 560,000 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 $504,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $fill in the blank 1 Earnings per share on common stock Plan 2 $fill in the blank 2 Earnings per share on common stock
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 Earnings ( ) per share on common stock Plan 2 Earnings ( ) per share on common stock
Sorenson Co. is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% bonds (at face) $3,000,000 Issue $10 par common stock $4,000,000 1,000,000 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 $1,000,000. Round your answers to two decimal places. Earnings Per Common Share Plan 1 Plan 2
I cant seem to figure out how to determine the earnings per share on common stock?? Help please!! Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,120,000 $560,000 Issue preferred $1 stock, $10 par — 930,000 Issue common stock, $5 par 1,120,000 750,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $896,000. Enter answers in dollars and cents, rounding to the nearest cent.
June Co. is considering the following alternative plans for financing the company: Issue 10% bonds (at face) Issue common stock, $10 par Plan I Plan I Plan II $3,000,000 $4,000,000 1,000,000 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 $1,000,000. Round your answers to two decimal places. Plan II 00
EXAMPLE 10: From the following, compute Debt Equity Ratio: Equity Share Capital 1,00,000 General Reserve 80,000 6.5 % Debentures 75,000 Current Liabilities 90,000 o add notes COMMENTS OTES
Sorenson Co. is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% Bonds (at face) - $20,000 Issue $10 par Common Stock $30,000 $10,000 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 $9,000. Round your answers to two decimal places. Plan 1 Plan 2
Stock price Shares outstanding (millions) Mkt value Debt (millions) Capitalization (book value) Debt Equity Beta Target D/E Cost of debt Market Info Risk-free rate Comparable Company 10 1,000 10,000 20.00% 80.00% 1.40 n/a 6.50% 4.00% Market Risk Premium 5.00% Company A n/a n/a n/a 25.00% 75.00% n/a 0.80 5.00% Required: Use the relevant Comparable Company and Company A to calculate the WACC for Company A Assume the tax rate for both companies is 30%.
Canvas C. compute the earnings per share for the three financing packages by completing the table below: Financial Package 3 Operating earnings in million - interest expense in million - Earnings available in million No. of Shares Earnings per share d. complete the table below for each of the three financing packages based on three assumptions for the return on assets shown below; Financial Packages Annual (ROA) 1 least leverage 3 most leverage 15% 10% 5% F1 DII F2 F3 F4 prt sc
I corporate bond offering 10%, muncipal hand offering 7% interest with other conditions remaining the same, which one is a investment 1 is 20% Assume your better. tax bracket 2 what are the limitations of financial statements and financial ratio analyses 2.

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	Plan 1	Plan 2
Issue 5% bonds (at face value)	$6,000,000	$2.000,000
Issue preferred $1 stock. $20 par	-	6,000,000
Issue common stock. $25 par	6,000,000	4,000,000