Effect of Financing on Earnings Per Share

Three different plans for financing a $6,200,000 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 40% of income.

Plan 1 Plan 2 Plan 3
10% bonds _ _ $3,100,000
Preferred 5% stock, $80 par _ $3,100,000 1,550,000
Common stock, $6.20 par $6,200,000 3,100,000 1,550,000
Total $ 6,200,000 $ 6,200,000 $ 6,200,000
Required:

1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $12,400,000. Enter answers in dollars and cents, rounding to the nearest cent.

Earnings Per Share on Common Stock
Plan 1 $
Plan 2 $
Plan 3 $
2. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $5,890,000. Enter answers in dollars and cents, rounding to the nearest cent.

Earnings Per Share on Common Stock
Plan 1 $
Plan 2 $
Plan 3 $
3. The principal 7 of Plan 1 is that it involves only the issuance of common stock, which does not require a periodic interest payment or return of principal, and a payment of preferred dividends Selectisis notItem 8 required.

Your project team’s recommendations to increase productivity have been approved and your team is now working on an implementation plan. in order to accomplish the plan, several subject matter experts from various parts of the organization have been brought in to assist. you have noticed friction and conflict among team members. some of the disagreement and opposition on your team supports the achievement of team goals and objectives. this type of conflict can be described as:

Chuck, a single taxpayer, earns $80,750 in taxable income and $30,750 in interest from an investment in city of heflin bonds. (use the u.s. tax rate schedule.) (do not round intermediate calculations. round your answers to 2 decimal places.)

Suppose that fizzo and pop hop are the only two firms that sell orange soda. the following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: pop hopadvertise doesn’t advertisefizzo advertise 10, 10 18, 2doesn’t advertise 2, 18 11, 11for example, the upper right cell shows that if fizzo advertises and pop hop doesn't advertise, fizzo will make a profit of $18 million, and pop hop will make a profit of $2 million. assume this is a simultaneous game and that fizzo and pop hop are both profit-maximizing firms.if fizzo decides to advertise, it will earn a profit if pop hop advertises and a profit if pop hop does not advertise.if fizzo decides not to advertise, it will earn a profit if pop hop advertises and a profit if pop hop does not advertise.if pop hop advertises, fizzo makes a higher profit if it chooses (not to advertise, to .if pop hop doesn't advertise, fizzo makes a higher profit if it chooses (not to advertise, to . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? fizzo will choose to advertise and pop hop will choose not to advertise.both firms will choose to advertise.fizzo will choose not to advertise and pop hop will choose to advertise.both firms will choose not to advertise.again, suppose that both firms start off not advertising. if the firms decide to collude, what strategies will they end up choosing? fizzo will choose not to advertise and pop hop will choose to advertise.both firms will choose not to advertise.fizzo will choose to advertise and pop hop will choose not to advertise.both firms will choose to advertise.