Duch Stadtted View World Hip O11-2 Bagan Corporation, le rowth company with 200,000 shares of comun stock outtanding is in need of approximately $40 million in new funds to finance required expansion. Currently, there are no other equities outstanding. Management has three options oper Sell $40 million of 12 per cent bonds at face value b. Sell shares of 10% preferred to 400,000 shares at 5100 each dividend $10 perare). 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 512 million per year, the income tax rate is SON Required 1. Complete the schedule below and calculate the earnings per share of common stock 12 Preferred Common bond stock Income before interest and income taxes $12,000,000 $12.000.000 $12.000.000 Less: Interest expre Income bortones Les Income taxes at 50% Net Income Less Preferred dividends Net Income available to como stockholders Number of common shares outstanding Earnings per share of common stock 2. Which financing option is most advantageous to the common stockholders? Why? F 7 8 9 0 P