1nvoker=& iakeAssignmentSessionLocator%3D&inprogress%3Dfalse eBook Show Me How Calculator Print Item O.PRIC... Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,440,000 $720,000 Issue preferred $1 stock, $10 par 1,200,000 Issue common stock, $5 par 1,440,000 960,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $576,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 X Earnings per share on common stock Plan 2 X Earnings per share on common stock Feedback Y Check My Work T.A... Set up a column for each plan. Remember to take interest, incomne tax and dividends into consideration. T.A... T.A... A... Check My Work 2 more Check My Work uses remaining. Previous Next %24 %24

1nvoker=& iakeAssignmentSessionLocator%3D&inprogress%3Dfalse eBook Show Me How Calculator Print Item O.PRIC... Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,440,000 $720,000 Issue preferred $1 stock, $10 par 1,200,000 Issue common stock, $5 par 1,440,000 960,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $576,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 X Earnings per share on common stock Plan 2 X Earnings per share on common stock Feedback Y Check My Work T.A... Set up a column for each plan. Remember to take interest, incomne tax and dividends into consideration. T.A... T.A... A... Check My Work 2 more Check My Work uses remaining. Previous Next %24 %24

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Description: 1nvoker=&iakeAssignmentSessionLocator%3D&inprogress%3DfalseeBookShow Me HowCalculatorPrint ItemO.PRIC...Alternative Financing PlansFrey Co. is considering the following alternative financing plans:Plan 1Plan 2Issue 10% bonds (at face value)$1,440,00

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 17E

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Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock, $10 par — 700,000 Issue common stock, $5 par 840,000 560,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $504,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $fill in the blank 1 Earnings per share on common stock Plan 2 $fill in the blank 2 Earnings per share on common stock
Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,600,000 $800,000 Issue preferred $1 stock, $10 par — 1,330,000 Issue common stock, $5 par 1,600,000 1,070,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $480,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings per share on common stock Plan 2 $ Earnings per share on common stock
Simonelli Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds (at face value) $5,000,000 4,000,000 Issue preferred $2.00 stock, $20 par — 2,000,000 Issue common stock, $25 par 5,000,000 4,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $1,000,000.
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock, $10 par — 700,000 Issue common stock, $5 par 840,000 560,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $252,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $fill in the blank 1 Earnings per share on common stock Plan 2 $fill in the blank 2 Earnings per share on common stock
The company capital structure consist of debt 340000 @ 4.05%, common stock 40% of preferred stock @ 9.09% and preferred stock 400000 @ 19.50%, calculate company’s weighted average cost of capital. Select one: a. 12.50% b. 11.79% c. 14.98% d. None of the option e. 13.15%
Fill in the table using the following information.Assets required for operation: $9,800Firm A uses only equity financingFirm B uses 30% debt with an 8% interest rate and 70% equityFirm C uses 50% debt with a 10% interest rate and 50% equityFirm D uses 50% preferred stock financing with a dividend rate of 10% and 50% equity financingEarnings before interest and taxes: $980If your answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. A B C D Debt $ $ $ $ Preferred stock $ $ $ $ Common stock $ $ $ $ Earnings before interest and taxes $980.00 $980.00 $980.00 $980.00 Interest expense $ $ $ $ Earnings before taxes $ $ $ $ Taxes (40% of earnings) $ $ $ $ Preferred stock dividends $ $ $ $ Income available to common stockholders $ $ $ $…
A Company wants to seek additional source of external financing. The current book value structure of the company is as follows: GHS13% Debentures (GHS 100 per debenture)800,00014% Preference Shares (GHS 100 per share)200,000Equity Shares (GHS 10 per share)1,000,000The following external financing opportunities are: (i)A debenture with 10-year maturity, 4% flotation cost and current market price of GHS 100.(ii)A redeemable preference share with 10-year maturity, 5% floatation cost and current market price of GHS 100. (iii)Equity shares – GHS 2 per share flotation costs and current market price of GHS 22.Dividend expected on equity share at the end year is GHS 2 per share, anticipated growth rate in dividends is 7%. Company pays all its earnings in the form dividends. Corporate tax rate is 50%. Required – Calculate the WACC
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Problem #1KKM Corporation discussed three different plans to finance $4,000,000 toward construction of a newwarehouse. Under each of the following plans the securities will be issued at their par or face valueamount, and the income tax rate is estimated at 25% of income.Plan#1 Plan#2 Plan#3Preferred 10% stock $40 Par 2,000,000Common stock $10 Par 4,000,000 2,000,000 1,000,00010% Bonds 3,000,000Total 4,000,000 4,000,000 4,000,000 Instructions:1. Determine for each plan the earnings per share of common stock, assuming that the income beforebond interest and income tax is $800,000.2. Determine for each plan the earnings per share of common stock, assuming that the income beforebond interest and income tax is $450,000.3. Discuss the advantages and disadvantages of each plan.
12 A. Assume Skyler Industries has debt of $4,514,983with a cost of capital of 9.9% and equity of $5,232,987 with a cost of capital of 6.2%. What is Skyler’s weighted average cost of capital for debt? Round to the nearest hundredth, two decimal places and submit the answer in a percentage.
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