Two companies are financed as follows:
Bonds payable, 9% issued at face
X Co.
$5,000,000
Y Co.
$3,000,000
Common stock, $25 par
3,000,000
3,000,000
Income tax is estimated at 40% of income for both companies.
Determine for each company the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000 each.

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The Answer of Two companies are financed as follows:
Bonds payable, 9% issued at face
X Co.
$5,000,000
Y Co.
$3,000,000
Common stock, $25 par
3,000,000
3,000,000
Income tax is estimated at 40% of income for both companies.
Determine for each company the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000 each.

Two Companies Are Financed as Follows