Carolyn Inc. is considering two alternatives to finance its construction of a new $5 million plant.

Issuance of 500,000 shars of common stock at the market price of $10 per share.

Issuance of $5 million, 9% bonds at par.

Complete the table below:

Issue Stock Issue Bonds

Income before interest and taxes $ 2,000,000 $2,000,000

Interest expense from bonds __________ __________

Income before income taxes $_________ $__________

Income tax expense (30%) __________ ___________

Net income $_________ $___________

Outstanding shares __________ 700,000

Earnings per share __________ ____________