Folmar Co. is considering the following alternative financing plans:
Plan 1 Plan 2
Issue 10% bonds (at face value) $2,000,000 $1,000,000
Issue preferred $1 stock, $10 par - 1,660,000
Issue common stock, $5 par 2,000,000 1,340,000
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 $800,000.
Enter answers in dollars and cents, rounding to the nearest cent.
Plan 1 Earnings per share on common stock
Plan 2 Earnings per share on common stock