Three plans for financing a $ 20,000,000 corporation are under consideration by its organizers. The bonds will be issued at their face value and the income tax rate is estimated at 20%. It is estimated that profit before interest and taxes will be $ 4,000,000.
Instructions
For each plan, determine the expected profit and the earnings per share. Prior to obtaining financing, there are no common shares outstanding.

Question

Three plans for financing a $ 20,000,000 corporation are under consideration by its organizers. The bonds will be issued at their face value and the income tax rate is estimated at 20%.  It is estimated that profit before interest and taxes will be $ 4,000,000.
Instructions
For each plan, determine the expected profit and the earnings per share. Prior to obtaining financing, there are no common shares outstanding.

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