Reference no: EM132654201
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.