FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Alternative financing plans
Frey 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 |
- | 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 that
income before bond interest and income tax is $800,000.
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