Alternative Financing Plans
Desmond Co. is considering the following alternative financing plans:
Plan 1 Plan 2
Issue 10% bonds (at face value) $1,400,000 $700,000
Issue preferred $1 stock, $10 par — 1,160,000
Issue common stock, $5 par 1,400,000 940,000
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $420,000.
Enter answers in dollars and cents, rounding to two decimal places.