help with all 3 parts please ×: CengageNOWv2 | Online X Gif S39000 0 of 8% bond

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help with all 3 parts please

×: CengageNOWv2 | Online X Gif S39000 0 of 8% bond X0SearchTextbol Solutio x 2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator; assignment-takeškinprogress false ice Exercises Show Me How Calculator Print Item Alternative Financing Plans Frey Co, is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $372,000. Enter answers in dollars and cents, rounding to the nearest cent. Plan 1 Plan 2 $1,240,000 $620,000 1,030,000 830,000 1,240,000 Earmings per share on common stock Earnings per share on common stock Check Hy Work 2 more Check My Wiork uses remaining

Explanation / Answer

1 Plan A Plan B Income before bond interest and income tax 372000 372000 Less Bond interest 124000 62000 Income before income tax 248000 310000 Less Income tax 40% 99200 124000 Net income 148800 186000 Less Preferred stock dividend 0 103000 Net income available for common stock 148800 83000 Common stock 248000 166000 Earning per share 0.6 0.5 2 a) Cash 400000           Bonds payable 400000 b) Interest expense 8000            Cash 8000 c) Bonds payable 400000             Cash 400000 3 Cash 3208089 Discount on issue of bonds payable 491911                  Bonds payable 3700000

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