Miller Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued at
Question:
Miller Co., which produces and sells skiing equipment, is financed as follows:
Bonds payable, 10% (issued at face amount)……… $10,000,000
Preferred 1% stock, $10 par………………………………… 10,000,000
Common stock, $25 par…………………………………….. 10,000,000
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is
(a) $3,000,000,
(b) $4,000,000, and
(c) $5,000,000.
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