Northeast Car Rental in China is considering two alternatives for the financing of a purchase of a fleet of cars. These two alternatives are:
1. Issue 60,000 ordinary shares at Y45 per share. (Cash dividends have not been paid nor is the payment of any contemplated.)
2. Issue 10%. 10-year bonds at par for Y2,700,000.
It is estimated that the company will earn Y800,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 90,000 ordinary shares outstanding prior to the new financing.

Instructions
Determine the effect on net income and earnings per share for these two methods of financing.