Question: Effect of Financing on Earnings per Share
Miller Co., which produces and sells skiing equipment, is financed as follows:
| Bonds payable, 10% (issued at face amount) |
$450,000 |
| Preferred $2 stock, $20 par |
450,000 |
| Common stock, $25 par |
450,000 |
Income tax is estimated at 40% of income.
Determine the earnings per share on common stock, assuming that the income before bond interest and income tax is
(a) $157,500,
(b) $202,500, and
(c) $247,500.
Enter answers in dollars and cents, rounding to the nearest cent.
a. Earnings per share on common stock $
b. Earnings per share on common stock $
c. Earnings per share on common stock $