Determine the earnings per share of common stock

Reference no: EM13258286

Wilson Co. is considering the following alternative financingplans.

Plan1 Plan 2

Issue 12% Bonds (at facevalue) $1,000,000 $500,000

Issue preferred $2 stock, $10 per share = 700,000

Issue common stock, $10par 1,000,000 800,000

Income tax is estimated at 40% of income. Determine theearnings per share of common stock, assuming income before bondinterest and income tax is $400,000.

Reference no: EM13258286

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