Effect of Financing on Earnings Per Share BSF Co., which produces and sells skiing equipment, is financed as follows:
Bonds payable, 8% (issued at face amount)
$7,500,000
7,500,000
Preferred 2% stock, $10 par
Common stock, $50 par
7,500,000
Income tax is estimated at 40% of income.
Round your answers to the nearest cent.
a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,000,000.
per share
b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $3,000,000.
per share
c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,500,000.
per share