3 parts

RL Electronics is considering two plans for raising $2,000,000 to expand operations. Plan A is to issue 5% bonds payable, and plan B is to issue 300,000 shares of common stock. Before any new financing, RL Electronics has net income of $450,000 and 400,000 shares of common stock outstanding. Managernent believes the company can use the new funds to eam additional income of $900,000 before interest and taxes. The income tax rate is 21%. Analyze the RL Electronics situation to determine which plan will result in higher earnings per share. (Complete all answer boxes. Enter "O" for any zero balances. Round earnings per share amounts to the nearest cent) Begin by completing the analysis below for plan A then plan B. Plan A: Issue $2,000,000 of 5% Bonds Payable Net income before new project Expected income on the new project before interest and income tax expenses Loss Interest expense Project income before income tax Loss: Income tax expense Project net income Net income with new project Earnings per share with new project Plan A Plan B