Alternative Financing Plans
Folmar Co. is considering the following alternative financing plans:
| |
Plan 1 |
Plan 2 |
| Issue 10% bonds (at face value) |
$880,000 |
|
$440,000 |
|
| Issue preferred $1 stock, $10 par |
- |
|
730,000 |
|
| Issue common stock, $5 par |
880,000 |
|
590,000 |
|
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 $616,000.
Enter answers in dollars and cents, rounding to the nearest cent.