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Question - effect of financing on earnings per share

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Question - Effect of Financing on Earnings Per Share

BSF Co., which produces and sells skiing equipment, is financed as follows:

Bonds payable, 10% (issued at face amount) $1,750,000

Preferred 2% stock, $20 par 1,750,000

Common stock, $25 par 1,750,000

Income tax is estimated at 60% of income.

Required - Round your answers to the nearest cent.

a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $770,000.

b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $945,000.

c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,120,000.

 

Reference no: EM132654201

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