Determine the earnings per share calculation

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Reference no: EM13788027

McLinden Corp. is considering financing $10,000,000 of its upcoming operations by issuing equity and bonds. McLinden is considering issuing $1,000,000 of 10%, $10 par Preferred stock, $4,000,000 of $1 par Common stock, and $5,000,000 of 12% 5 year bonds. Assume that the income before bond interest and income tax is $4,000,000. The tax rate is 40%.

Determine the Earnings per Share calculation for the first year if McLinden finances in this manner. Use the table given below:

Earnings before interest

and income tax $

Deduct interest on bonds _________

Income before income tax $

Less: income tax _________

Net income $

Dividends on

Preferred stock _________

Available for dividends

on common stock $

Shares of common

stock outstanding _________

Earnings per share on

common stock $

Reference no: EM13788027

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