I have three ways in which I can finance a $5,000,000 expansion project
1. finance the entire project by the issuance of a common stock $20 par
2. financing half of the project by common stock $20 and the other half 9% preferred stock
3. The issuance of a 12% bond for $3,000,000, and the remaining capitalization split between 9% preferred stock and $10 par common stock.
The project will earn $1,000,000 anually prior to any interest deducion on bonds and the income tax is estimated to be 30% of the income.
Q: Calculate the earning per share on common stock


I can't see how this is possible without knowing how many shares the company has and how many are outstanding?

OK I noticed that 18 people had viewed my question and no one has answered, can the question be answered?

Sos please advise how you calculate common stock??

Calralaroche, the thread is a year old and your question actually has nothing to do with the original question. You should always start your own thread because tagging onto the ends of other threads just confuses us.

Common stock is just par times the number of shares.

Quote:

---

Originally Posted by rosabellacj

I have three ways in which I can finance a $5,000,000 expansion project
1. finance the entire project by the issuance of a common stock $20 par
2. financing half of the project by common stock $20 and the other half 9% preferred stock
3. The issuance of a 12% bond for $3,000,000, and the remaining capitalization split between 9% preferred stock and $10 par common stock.
The project will earn $1,000,000 anually prior to any interest deducion on bonds and the income tax is estimated to be 30% of the income.
Q: Calculate the earning per share on common stock


I can't see how this is possible without knowing how many shares the company has and how many are outstanding?

---

I am sorry, I can not solve the problem for you, but I will guide you how to go about it:

1. Prepare a four column chart. Column 1 for details and the other three for each of the options
2. In the first row enter the expected profit before interest and taxes for each option
3. In the second row enter the interest expense in column for option 3
4 Enter profit before taxes in each column row 2 - row 3
5. Enter tax expense based on row 4
6. This will give you profit after tax
7. Deduct preferred dividend in columns for options 2 and 3
8. This will give you profit available for common stock
9. Enter common stock issued and outstanding for all options
10. Divide 8 by 9 to get earnings per share on common stock