Question: Simonelli 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

Simonelli 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$1,000,000.

Plan 1 Plan 2 Issue 8% bonds (at face value) 4,000,000 2,000,000 4,000,000 $5,000,000 Issue preferred $2.00 stock, $20 par Issue common stock, $25 par 5,000,000

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