Question Content Area Sorenson Co. is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% bonds (at face) - $400,000 Issue $10 par common stock $600,000 $200,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $150,000. Round your answers to two decimal places. Earnings Per Common Share Plan 1 $fill in the blank 1 Plan 2 $fill in the blank 2
Question Content Area Sorenson Co. is considering the following alternative plans for financing the company: Plan 1 Plan 2 Issue 10% bonds (at face) - $400,000 Issue $10 par common stock $600,000 $200,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $150,000. Round your answers to two decimal places. Earnings Per Common Share Plan 1 $fill in the blank 1 Plan 2 $fill in the blank 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sorenson Co. is considering the following alternative plans for financing the company:
| Plan 1 | Plan 2 | |
| Issue 10% bonds (at face) | - | $400,000 |
| Issue $10 par common stock | $600,000 | $200,000 |
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $150,000. Round your answers to two decimal places.
| Earnings Per Common Share | |
| Plan 1 | $fill in the blank 1 |
| Plan 2 | $fill in the blank 2 |
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