Banks Company is considering two alternatives to finance its purchase of a new $4,000,000$ office building.

$($a$)$ Issue $400,000$ ordinary shares at $10$ per share.

$($b$)$ Issue $8\%,10-$year bonds at par $(4,000,000).$

Income before interest and taxes is expected to be $$3,000,000.$ The company has a $30\%$ tax rate and has $800,000$ ordinary shares outstanding prior to the new financing.