the george corporation is considering raising new funds by either issuing preferred 540098

The George Corporation is considering raising new funds by either issuing preferred stock or issuing additional common shares. The preferred stock alternative consists of issuing $20 million of $25 par, 5% preferred stock. The common stock alternative consists of issuing 1 million new shares at $20 per share. The George Corporation currently has 4 million shares outstanding. The expected net profits of the George Corporation for the next few years are the following:

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Year

Net Profit

One year from now

$5.4 million

Two years from now

6.0 million

Three years from now

4.2 million

Four years from now

5.0 million

Calculate George’s earnings available for common stock and earnings per share for each year and each alternative financing arrangement.

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