. McLinden Corp. is considering financing $10000000 of its upcoming operations by issuing equity and bonds. McLinden is considering issuing
$1000000 of 10% $10 par Preferred stock $4000000 of $1 par Common stock and $5000000 of 12% 5 year bonds. Assume that the income before bond interest
and income tax is $4000000. The tax rate is 40%.
Determine the Earnings per Share calculation for the first year if McLinden finances in this manner. Use the table given below:
Earnings before interest & income tax
deduct interest on bonds
income before income tax
less: income tax
net income
dividends on prefeffed stock
avialable for dividends on common stock
shares of common stock oustanding
earnings per share on common stock