Debt versus Preferred Stock In 2003, Hamilton Corporation had earnings before taxes and interest of $8,495 million. Long-term debt was $18,463 million. The company had no preferred stock outstanding, although 10 million shares were authorized. Suppose $8,000 million of preferred stock with a dividend rate of 11% had been issued instead of $8,000 million of the long-term debt. The debt had an effective interest rate of 7%. Assume the income tax rate is 40%. Compute net income and net income attributable to common shareholders under

(a) the current situation with $18,463 million of long-term debt and no preferred stock, and

(b) the assumed situation with $8,000 million of preferred stock and $10,463 million of long-term debt.