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
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
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 1PEA
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Question
Desmond Co. is considering the following alternative financing plans:
| Plan 1 | Plan 2 | |||
| Issue 10% bonds (at face value) | $840,000 | $420,000 | ||
| Issue |
— | 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 |
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