Current Attempt in Progress

Carla Vista Health is considering two alternatives for the financing of some high technology medical equipment. These two alternatives are:

Issue $60,000$ shares of $$10$ par value common stock at $$50$ per share.

Issue $$3,000,000,7\%,10-$year bonds at par.

It is estimated that the company will earn $$930,000$ before interest and taxes as a result of acquiring the medical equipment. The company has an estimated tax rate of $40\%$ and has $90,000$ shares of common stock outstanding prior to the new financing.

Determine the effect on net income and earnings per share for these two methods of financing. $($Round earnings per share to $2$ decimal places, e$.$g$.2\mathrm{.}25.)$