Question: Texcar Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income. Determine the earnings per share of common stock,

Texcar 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$1,200,000.

Plan 1 Plan 2 Issue 6% bonds at face value) Issue preferred $3 stock, $30 par Issue common stock, $20 par $6,000,000 5,000,000 3,000,000 4,000,000 6,000,000

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