Sorenson Co. is considering the following alternative plans for financing the company: Income tax is estimated at 40% of income.Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

Question

Sorenson Co. is considering the following alternative plans for financing the company:​  Income tax is estimated at 40% of income.Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

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The Answer of Sorenson Co. is considering the following alternative plans for financing the company:​  Income tax is estimated at 40% of income.Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.