Three different plans for financing a $5400000 corporation are under considera

Three different plans for financing a $5400000 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 40% of income.

1. Determine for each plan the earnings per share of common stock assuming that the income before
bond interest and income tax is $10800000. Enter answers in dollars and cents rounding to the nearest
cent.

2. Determine for each plan the earnings per share of common stock assuming that the income before bond interest
and income tax is $5130000. Enter answers in dollars and cents rounding to the nearest cent.

3. Discuss the advantages and disadvantages of each plan.