Three plans for financing a $20,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount and the income tax rate is estimated at 30%. It is estimated that income before interest and taxes will be $5,000,000.
Instructions
Determine for each plan, the expected net income and the earnings per share on common stock.

Question

Three plans for financing a $20,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount and the income tax rate is estimated at 30%.  It is estimated that income before interest and taxes will be $5,000,000.
Instructions
Determine for each plan, the expected net income and the earnings per share on common stock.

Quizplus · Accepted Answer

The Answer of Three plans for financing a $20,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount and the income tax rate is estimated at 30%.  It is estimated that income before interest and taxes will be $5,000,000.
Instructions
Determine for each plan, the expected net income and the earnings per share on common stock.

Three Plans for Financing a $20,000,000 Corporation Are Under Consideration