Liu Curtain Rod Company is considering two plans for raising \(\$ 1,000,000\) to expand operations. Plan A is to borrow at 8 percent, and plan B is to issue 200,000 shares of common stock. Before any new financing, Liu has net income of \(\$ 600,000\) and 200,000 shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of \(\$ 420,000\) before interest and taxes. The income tax rate is 40 percent.

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Prepare an analysis like Exhibit 16-7 to determine which plan will result in higher earnings per share.