Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 5

A Alternative financing plans
Owen Co. is considering the following alternative financing plans:

Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming income before bond interest and income tax is $750,000.
B Alternative financing plans
Brower Co. is considering the following alternative financing plans:

Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming income before bond interest and income tax is $2,000,000.