Alternative Financing Plans
Frey 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 on common stock, assuming that
income before bond interest and income tax is $1,056,000.
Enter answers in dollars and cents, rounding to the nearest
cent.
Plan 1
$...