XYZ Company is considering the following financing plans. Plan 1 Plan 2 Plan 3 Bonds, 10% $3,000,000 Preferred stock, $100 par, 1% $2,000,000 $1,000,000 Common stock, $10 par $5,000,000 3,000,000 $1,000,000 $5,000,000 $5,000,000 $5,000,000 The company has earnings before interest and taxes of $750,000 and assumes a tax rate of 40%. Calculate earnings per share for each plan.
XYZ Company is considering the following financing plans. Plan 1 Plan 2 Plan 3 Bonds, 10% $3,000,000 Preferred stock, $100 par, 1% $2,000,000 $1,000,000 Common stock, $10 par $5,000,000 3,000,000 $1,000,000 $5,000,000 $5,000,000 $5,000,000 The company has earnings before interest and taxes of $750,000 and assumes a tax rate of 40%. Calculate earnings per share for each plan.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter8: Liabilities And Stockholders' Equity
Section: Chapter Questions
Problem 8.1.3P
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