Chapter 11 Assignment CP 11-2 Bagan Corporation, a profitable growth company with 200.000 shares of common stock outstanding, is in need of approximately 540 million in new funds to finance required expansion. Currently, there are no other equities outstanding. Management has three options open: a. Sell S40 million of 12-per cent bonds at face value. b. Sell shares of 10% preferred stock: 400,000 shares at $100 each (dividend $10 per share). 6. Sell another 200,000 shares of common stock at $200 each. Operating income before interest and income taxes on completion of the expansion is expected to average $12 million per year; the income tax rate is 50% Required: 1. Complete the schedule below and calculate the earnings per share of common stock 124 Preferred Common bonds stock stock Income before interest and income taxes $12,000,000 $12,000,000 $12,000,000 Less: Interest expense Income before taxes Less Income taxes 505 Net income tesse Preferred dividends Net income available to common stockholders Number of common shares outstanding ani pesha ofico which financing cost advantageous to the common stodolers? W