Homework Answers
| Plan #1 | Plan #2 | |
| Issue Bonds | Issue Stock | |
| Income before interest and taxes | 500000 | 500000 |
| Interest expense | 300000 | 0 |
| Income before taxes | 200000 | 500000 |
| Income taxes | 60000 | 150000 |
| Net income | 140000 | 350000 |
| Outstanding shares | 100000 | 300000 |
| Earnings per share | 1.40 | 1.17 |
| Note: | ||
| Interest expense = 5000000*6%=$300000 | ||
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The board of directors of Lauber Corporation are considering two plans for financing the purchase of...
second photo is just to show the scroll down options for the choices in photo one...
second photo is just to show the scroll down options for the
choices in photo one
Brief Exercise 237 The board of directors of Lauber Corporation are considering two plans for financing the purchase of new plant equipment. Plan #1 would require the issuance of $5,000,000, 6%, 20-year bonds at face value. Plan #2 would require the issuance of 200,000 shares of $5 par value common stock that is selling for $25 per share on the open market. Lauber Corporation...
Crane Company is considering these two alternatives for financing the purchase of a fleet of airplanes....
Crane Company is considering these two alternatives for financing the purchase of a fleet of airplanes. 1. Issue 57,000 shares of common stock at $49 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 15%, 10-year bonds at face value for $2,793,000. It is estimated that the company will earn $813,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 40% and has...
Three plans for financing a $20,000,000 corporation are under consideration by its organizers. Under each of...
Three plans for financing a $20,000,000 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 30%. Plan 1 Plan 2 Plan 3 9% Bonds — — $10,000,000 6% Preferred Stock, $100 par — $10,000,000 5,000,000 Common Stock, $10 par $20,000,000 10,000,000 5,000,000 Total $20,000,000 $20,000,000 $20,000,000 It is estimated that income before interest and taxes will be $5,000,000. Instructions Determine...
Three plans for financing a $20,000,000 corporation are under consideration by its organizers. Under each of...
Three plans for financing a $20,000,000 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 30%. Plan 1 Plan 2 Plan 3 9% Bonds — — $10,000,000 6% Preferred Stock, $100 par — $10,000,000 5,000,000 Common Stock, $10 par $20,000,000 10,000,000 5,000,000 Total $20,000,000 $20,000,000 $20,000,000 It is estimated that...
ke: Practice! Alternative financing riaus Alternative Financing Plans Frey Co. is considering the following alternative financing...
ke: Practice! Alternative financing riaus Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 $960,000 Issue 10% bonds (at face value) Plan 2 $480,000 800,000 Issue preferred $1 stock, $10 par Issue common stock, $5 par 960,000 640,000 Income tax is estimated at 40% of income. Determine the earnings per Share on common stock, assuming that income before bond interest and income tax is $384,000 Enter answers in dollars and cents, rounding to two decimal...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 $1,080,000 Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par $540,000 900,000 720,000 1,080,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $324,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 Earnings per...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,120,000 $560,000 Issue preferred $1 stock, $10 par — 930,000 Issue common stock, $5 par 1,120,000 750,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $896,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,040,000 $520,000 Issue preferred $1 stock, $10 par — 860,000 Issue common stock, $5 par 1,040,000 700,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $312,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,080,000 $540,000 Issue preferred $1 stock, $10 par- 900,000 Issue common stock, $5 par 1,080,000 720,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $432,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,080,000 $540,000 Issue preferred $1 stock, $10 par — 900,000 Issue common stock, $5 par 1,080,000 720,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $756,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $...
second photo is just to show the scroll down options for the
choices in photo one
Brief Exercise 237 The board of directors of Lauber Corporation are considering two plans for financing the purchase of new plant equipment. Plan #1 would require the issuance of $5,000,000, 6%, 20-year bonds at face value. Plan #2 would require the issuance of 200,000 shares of $5 par value common stock that is selling for $25 per share on the open market. Lauber Corporation...
Crane Company is considering these two alternatives for financing the purchase of a fleet of airplanes. 1. Issue 57,000 shares of common stock at $49 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 15%, 10-year bonds at face value for $2,793,000. It is estimated that the company will earn $813,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 40% and has...
ke: Practice! Alternative financing riaus Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 $960,000 Issue 10% bonds (at face value) Plan 2 $480,000 800,000 Issue preferred $1 stock, $10 par Issue common stock, $5 par 960,000 640,000 Income tax is estimated at 40% of income. Determine the earnings per Share on common stock, assuming that income before bond interest and income tax is $384,000 Enter answers in dollars and cents, rounding to two decimal...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 $1,080,000 Issue 10% bonds (at face value) Issue preferred $1 stock, $10 par Issue common stock, $5 par $540,000 900,000 720,000 1,080,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $324,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 Earnings per...
Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,080,000 $540,000 Issue preferred $1 stock, $10 par- 900,000 Issue common stock, $5 par 1,080,000 720,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $432,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings...
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