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Discuss income before bond interest and income tax

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Reference no: EM131776758

Alternative Financing Plans

Folmar Co. is considering the following alternative financing plans:

  Plan 1 Plan 2
Issue 10% bonds (at face value) $880,000   $440,000  
Issue preferred $1 stock, $10 par -   730,000  
Issue common stock, $5 par 880,000   590,000  

Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming income before bond interest and income tax is $616,000.

Enter answers in dollars and cents, rounding to the nearest cent.

Reference no: EM131776758

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