Determine for each plan the earnings per share of common

Assignment Help Accounting Basics

Reference no: EM13393929

Three different plans for financing a $5,000,000 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

8% bonds                                 ---                ---                          $2,500,000

Preferred 4% stock, $100 par ---                $2,500,000           1,250,000

Common stock, $5 par            $5,000,000 2,500,000             1,250,000

          Total                              $5,000,000 $5,000,000           $5,000,000

1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,000,000.

2. Determine for each plan the earning per share of common stock, assuming that the income before bond interest and income tax is $300,000.

3. Discuss the advantages and disadvantages of each plan.

Reference no: EM13393929

Questions Cloud

Which do you think is preferable a company that conducts : 1. which do you think is preferable a company that conducts its own marketing research or one that hires an outside

Compare and contrast the use of material requirements : write a 1400- to 1750-word paper in which you include the following differentiate at least two or three key elements

If the appropriate interest rate is 508 percent what is the : trigen corp. management will invest cash flows of 528382 286398 295100 818400 1239644 and 1617848 in research and

What should a company consider when attempting to develop a : 1.what should a company consider when attempting to develop a new product? can you think of some new products that have

Determine for each plan the earnings per share of common : three different plans for financing a 5000000 corporation are under consideration by its organizers. under each of the

How does incentive plan align employees incentives with : part of a workers pay on an automobile assembly line is based on the number of cars in a pay period that come off the

Determine the bond proceeds from january first 2014 was : determine the bond proceeds from january first 2014 was the bond issued at a premium or discount or at par value? if

Multidomestic companies pursue different strategies in each : 1.which of the following statements about the service sector of the american economy is

1 describe sources of conflict within an organization 2 : 6-8 slides power point with speaker notes 200 - 250 words per slide excluding title and reference slideleaders must

User Account

All Pages