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Effect of Financing on Earnings Per Share Three different plans for financing a $5,800,000 corporation...

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Effect of Financing on Earnings Per Share Three different plans for financing a $5,800,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 40% of income. Plan 1 Plan 2 Plan 3 10% bonds $2,900,000 Preferred 10% stock, $100 par $2,900,000 1,450,000 Common stock, $4 par $5,800,000 2,900,000 1,450,000 Total $5,800,000 $5,800,000 $5,800,000 Round the answers to nearest cent. Instructions: 1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,400,000. Earnings per share of common stock Plan 1 per share Plan 2 $ per share Plan 3 $ per share 2. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $910,000. Earnings per share of common stock Plan 1 per share Plan 2 I!! per share Plan 3 $ per share

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