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E11.8 (LO 4) Global Car Rental is considering two alternatives for the financing of a purchase of a fleet of cars. These two alternatives are:
E11.8 (LO 4) Global Car Rental is considering two alternatives for the financing of a purchase of a fleet of cars. These two alternatives are: 1. Issue 60,000 ordinary shares at 40 per share. (Cash dividends have not been paid nor is the pay- ment of any contemplated.) 2. Issue 7%, 10-year bonds at face value for 2,400,000, E11.8 It is estimated that the company will earn 800,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 90,000 ordinary shares outstanding prior to the new financing Instructions Determine the effect on net income and earnings per share for these two methods of financing
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