Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds...

 

Transcribed Image Text:

Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,080,000 $540,000 Issue preferred $1 stock, $10 par 900,000 Issue common stock, $5 par 1,080,000 720,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $756,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 Plan 2 Earnings per share on common stock Earnings per share on common stock Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,080,000 $540,000 Issue preferred $1 stock, $10 par 900,000 Issue common stock, $5 par 1,080,000 720,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $756,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 Plan 2 Earnings per share on common stock Earnings per share on common stock