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Find the earnings per share of common stock

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Reference no: EM132683518

Problem - Alternative financing plans - Fly Co. is considering the following alternative financing plans:

 

Plan 1

Plan 2

Issue 12% bonds (at face value)

$10,000,000

$5,000,000

Issue preferred $1.75 stock, $20 par

-

8,000,000

Issue common stock, $20 par

10,000,000

7,000,000

Income tax is estimated at 40% of income.

Required - Find the earnings per share of common stock, assuming income before bond interest and income tax is $2,000,000.

Reference no: EM132683518

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