Question:
Alternative Financing Plans
Folmar Co. is considering the following alternative financing plans:
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Plan 1
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Plan 2
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Issue 10% bonds (at face value)
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$1,360,000
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$680,000
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Issue preferred $1 stock, $10 par
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Ac€??
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1,130,000
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Issue common stock, $5 par
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1,360,000
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910,000
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Income tax is estimated at 40% of income.
Determine the earnings per share on common stock, assuming income before bond interest and income tax is $408,000.
Enter answers in dollars and cents, rounding to the nearest cent.
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Plan 1
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$ Earnings per share on common stock
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Plan 2
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$ Earnings per share on common stock
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