Sorenson Co., is considering the following alternative plans for financing their 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 their 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 their 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.