Texcar Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income.
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Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming income before bond interest and income tax is$1,200,000.
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Plan 1 Plan 2 Issue 6% bonds at face value) Issue preferred $3 stock, $30 par Issue common stock, $20 par $6,000,000 5,000,000 3,000,000 4,000,000 6,000,000
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Plan 1 Plan 2 Earnings before bond interest and income tax 1200000 1200000 Deduct interest on bo...View the full answer
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Related Book For
Corporate Financial Accounting
ISBN: 978-1133952411
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
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