Owen Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income.
Question:
Owen 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 $750,000.
Transcribed Image Text:
Plan 1 Plan 2 issue 790 bonds (at face value) Issue preferred $1 stock, $20 par Issue common stock, $25 par $5,000,000 3,400,000 3,600,000 3,000,000 5,000,000
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1 5000000 7 2 400000 40 3 3400000 7 4 512000 40 5 3600000 20 100 Earnings before bond inter...View the full answer
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Related Book For
Financial and Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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