Jenson Co, Is Considering the Following Alternative Plans for Financing Their

question 156

Essay

Jenson Co., is considering the following alternative plans for financing their company:
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

---

Definitions:

Value

Under the Code (except for negotiable instruments and bank collections), generally any consideration sufficient to support a simple contract.

Qualified Indorsement

An endorsement on a negotiable instrument that limits the liability of the endorser or specifies particular conditions for the endorsement's validity.

Liability

A legal responsibility or obligation, often involving financial compensation, that arises from actions or agreements.

Payable to Cash

A term indicating that a check or draft is to be paid to the bearer or holder, making it easily transferable.