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Effect of Financing on Earnings Per Share Three different plans for financing an $7,100,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the Income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 $3,550,000 1,775,000 1,775,000 $7.100,000 10% Bonds Preferred 10% stock, $40 par Common stock, $7.1 par Total $7.100,000 $7,100,000 $3,550,000 3,550,000 $7,100,000 Required: 1. Determine the samnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $14,200.com Enter answers in dollars and cents, rounding to two decimal places. Earnings Per

Effect of Financing on Earnings Per Share Three different plans for financing an $7,100,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the Income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 $3,550,000 1,775,000 1,775,000 $7.100,000 10% Bonds Preferred 10% stock, $40 par Common stock, $7.1 par Total $7.100,000 $7,100,000 $3,550,000 3,550,000 $7,100,000 Required: 1. Determine the samnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $14,200.com Enter answers in dollars and cents, rounding to two decimal places. Earnings Per

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Effect of Financing on Earnings Per Share Three different plans for financing an $7,100,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the Income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 10% Bonds Preferred 10% stock, $40 par Common stock, $7.1 par Total Plan L Plan 2 Plan 3 Earnings Per Share on Common Stock 0.79 X 0.92 X $7.100,000 $7,100,000 Required: 1. Determine the samnings per ahara ot.common stack for each plan, assuming that the income before hond interest and income las is $14,200.000 Enter answers in dollars and cents, rounding to two decimal places. 3.72 $3,550,000 3,550,000 $7,100,000 $3,550,000 1,775,000 1,775,000 $7.100,000
Transcribed Image Text:Effect of Financing on Earnings Per Share Three different plans for financing an $7,100,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the Income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 10% Bonds Preferred 10% stock, $40 par Common stock, $7.1 par Total Plan L Plan 2 Plan 3 Earnings Per Share on Common Stock 0.79 X 0.92 X $7.100,000 $7,100,000 Required: 1. Determine the samnings per ahara ot.common stack for each plan, assuming that the income before hond interest and income las is $14,200.000 Enter answers in dollars and cents, rounding to two decimal places. 3.72 $3,550,000 3,550,000 $7,100,000 $3,550,000 1,775,000 1,775,000 $7.100,000
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