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What are the earnings per common share

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Reference no: EM133104600

Question - A firm with earnings before interest and taxes of $500,000 needs $1 million of additional funds. If it issues debt, the bonds will mature after 20 years and pay interest of 8 percent. The firm could issue preferred stock with a dividend rate of 8 percent. The firm has 100,000 shares of common stock outstanding and is in the 30 percent income tax bracket. What are the earnings per common share under the two alternatives?

Reference no: EM133104600

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