Question Content Area Ulmer Company is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds at face value $2,000,000 $1,000,000 Issue preferred stock, $15 par — 1,500,000 Issue common stock, $10 par 2,000,000 1,500,000 Income tax is estimated at 35% of income. Dividends of $1 per share were declared and paid on the preferred stock. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $600,000. Round your answers to two decimal places. Earnings per Shareon Common Stock Plan 1 $fill in the blank 1 Plan 2 $fill in the blank 2
Question Content Area Ulmer Company is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds at face value $2,000,000 $1,000,000 Issue preferred stock, $15 par — 1,500,000 Issue common stock, $10 par 2,000,000 1,500,000 Income tax is estimated at 35% of income. Dividends of $1 per share were declared and paid on the preferred stock. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $600,000. Round your answers to two decimal places. Earnings per Shareon Common Stock Plan 1 $fill in the blank 1 Plan 2 $fill in the blank 2
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 1PEB: Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40%...
Related questions
Question
Question Content Area
Ulmer Company is considering the following alternative financing plans:
|
Plan 1
|
Plan 2
|
|
| Issue 8% bonds at face value | $2,000,000 | $1,000,000 |
| Issue |
— | 1,500,000 |
| Issue common stock, $10 par | 2,000,000 | 1,500,000 |
Income tax is estimated at 35% of income. Dividends of $1 per share were declared and paid on the preferred stock.
Determine the earnings per share of common stock, assuming income before bond interest and income tax is $600,000. Round your answers to two decimal places.
| Earnings per Share on Common Stock |
|
| Plan 1 | $fill in the blank 1 |
| Plan 2 | $fill in the blank 2 |
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