Question: Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock,

Frey Co. is considering the following alternative financing plans:

Plan 1 Plan 2
Issue 10% bonds (at face value) $840,000 $420,000
Issue preferred $1 stock, $10 par 700,000
Issue common stock, $5 par 840,000 560,000

Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $420,000.

Enter answers in dollars and cents, rounding to two decimal places.

Plan 1 $ Earnings per share on common stock
Plan 2 $ Earnings per share on common stock

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