Gonzales Co. is considering the following alternative plans for financing its company:
Plan 1 | Plan 2 | |
---|---|---|
Issue 10% bonds (at face value) | – | $2,000,000 |
Issue common stock, $10 par | $3,000,000 | $1,000,000 |
Income tax is estimated at 40% of income.
Determine the earnings per share of the common stock under the two alternative financing plans, assuming that income before interest and income tax is $750,000.
Billy’s Exterminators, Inc., has sales of $817,000, costs of $343,000, depreciation expense of $51,000, interest expense of $38,000, and a tax rate of 21 percent. The firm just paid out $95,000 in cash dividends. The company has 90,000 shares of common stock outstanding.
a. What is the earnings per share, or EPS, figure?
b. What are the dividends per share?
Frantic Fast Foods had earnings after taxes of $1,320,000 in 20X1 with 384,000 shares outstanding. On January 1, 20X2, the firm issued 45,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 26 percent.
a. Compute earnings per share for the year 20X1. (Round the answer to 2 decimal places.)
b. Compute earnings per share for the year 20X2. (Round the answer to 2 decimal places.)