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Determine the earnings per share on common stock

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Alternative Financing Plans

Folmar Co. is considering the following alternative financing plans:
Plan 1 Plan 2
Issue 10% bonds (at face value) $1,200,000 $600,000
Issue preferred $1 stock, $10 par - 1,000,000
Issue common stock, $5 par 1,200,000 800,000
Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming income before bond interest and income tax is $480,000.

Enter answers in dollars and cents, rounding to the nearest cent.

Plan 1 $Earnings per share on common stock

Plan 2 $Earnings per share on common stock

Reference no: EM131746516

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