Question: Fly Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income.Determine the earnings per share of common stock, assuming

Fly Co. is considering the following alternative financing plans:

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 $2,000,000.

Plan 2 Plan 1 Issue 12% bonds (at face value) issue preferred $1.75 stock, $20 par Issue common stock, $20 par $5,000,000 8,000,000 S10,000,000 10,000,000 7,000,000

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