Question: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,040,000 $520,000 Issue preferred $1 stock, $10 par 860,000 Issue common stock, $5 par 1,040,000

Plan 1 Plan 2 Issue 10% bonds (at face value) $1,040,000 $520,000 Issue preferred $1 stock, $10 par 860,000 Issue common stock, $5 par 1,040,000 700,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming income before bond interest and income tax is $520,000.

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