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

Wilkinson 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$400,000.

Plan 1 Plan 2 Issue 12% bonds (at face value) Issue preferred $2 stock, $10 per share Issue common stock, $10 par 1,000,000 500,000 700,000 1,000,000 80,000

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