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Mclinden corp is considering financing 10000000 of its

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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 & income tax
  • deduct interest on bonds
  • income before income tax
  • less: income tax
  • net income
  • dividends on prefeffed stock
  • avialable for dividends on common stock
  • shares of common stock oustanding
  • earnings per share on common stock

Reference no: EM13583069

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