earnings per share

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Apr 5, 2008, 06:12 PM

meganbusch20

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Join Date: Apr 2008

Posts: 2

earnings per share

Jones Co., is considering the following alternative plans for financing their company:

Plan I Plan II
Issue 10% Bonds (at face) - $2,000,000
Issue $10 Common Stock $3,000,000 $1,000,000

Income tax is estimated at 40% of income.

Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

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