BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 8% (issued at face amount) .. $7,500,000 Preferred 2% stock, $10 par .......... 7,500,000 Common stock, $50 par .......... 7,500,000
Income tax is estimated at 40% of income.
Round all answers to the nearest cent.
a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,000,000.
b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $3,000,000.
c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,500,000.