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Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Plan 2 $880,000 1,460,000 1,180,000 Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par Income tax is estimated at 40% of income. Plan 1 $1,760,000 - 1,760,000 Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $528,000.

Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Plan 2 $880,000 1,460,000 1,180,000 Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par Income tax is estimated at 40% of income. Plan 1 $1,760,000 - 1,760,000 Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $528,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par Income tax is estimated at 40% of income. Plan 1 Plan 2 $ Plan 1 $ $1,760,000 Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $528,000. Enter answers in dollars and cents, rounding to two decimal places. Earnings per share on common stock Earnings per share on common stock 1,760,000 Plan 2 $880,000 1,460,000 1,180,000
Transcribed Image Text:Alternative Financing Plans Desmond Co. is considering the following alternative financing plans: Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par Income tax is estimated at 40% of income. Plan 1 Plan 2 $ Plan 1 $ $1,760,000 Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $528,000. Enter answers in dollars and cents, rounding to two decimal places. Earnings per share on common stock Earnings per share on common stock 1,760,000 Plan 2 $880,000 1,460,000 1,180,000
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