Textbook Problem

Effect of financing on earnings per share

Three different plans for financing a $5,000,000 corporation are under consideration hy its organizers. I'nder each of the following plans, the securities will be issued at their par or face amount, and the income, tax rate is estimated at 40% of income

Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,000,000.