Alternative Financing Plans Owen Co. is considering the following alternative fi

Question

Alternative Financing Plans Owen Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 7% bonds (at face value) 55,000,000 53,400,000 Issue preferred 51 stock, S20 par - 3,600,000 Issue common stock, S25 par 5,000,000 3,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is S750.000. Enter answers in dollars and cents, rounding to the nearest whole cent. Plan 1 $ Earnings per share on common stock Plan 2 $ Earnings per share on common stock

Explanation / Answer

plan 1- EPS is $3

plan 2- $4

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