Company X is considering two plans for raising $2,500,000 to expand its current operations. The first plan involves the sale of $2,500,000, 8%, 10-year bonds sold at face value. The second plan involves selling 50,000 common shares at $50 each. 

Company X currently has outstanding 200,000 shares of stock and a net income of $900,000. 

Either plan is expected to generate additional income of $400,000 before interest and taxes. The income tax rate is 30%. 

 

How do you calculate earnings per share for both plans?

Answer rating: 100% (QA)

To calculate earnings per share EPS for both plans we need to find the net income available to commo... View the full answer