I don't know how to solve this problem or which steps have to be taken to solve this. Thanks!
Earnings per share on common stock means the earnings available for distribution to common stockholder after all expenses of the company have been incurred
Income from interest and taxes
Less. Bond interest
Profit before taxes
Less taxes @ 40%
Profit after tax
Less preference dividend
Income available to common stockholders
Number of Equity stockholders
So, the preference dividend @ $1= $80,000
Number of common stock in plan 2= $640,000.5 = 128,000...
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