EXERCISE 10.17 Gilliland Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1) Issue 90,000 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2) Issue 10%, 10-year bonds at face value for $2,700,000. It is estimated that the company will generate $800,000 of income before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 120,000 shares of common stock outstanding prior to the new financing. Instructions Determine the effect on net income and earnings per share for these two methods of financing. Plan 1-Issue Plan 2-Issue Income before interest & taxes Stock $800,000 Bonds $800,000 Interest expense ($2,700,000 x 10%) Income before taxes Income Tax Expense (30%) Net Income Outstanding shares Earnings per share Crosetti's Electronics issues an $800,000, 8%, 10-year mortgage note on Dec 31, 2022, to help finance a plant expansion program. The terms of the note provide for annual installment payments of $119,224 each Dec 31. This problem directly applies to YOU if you have any "monthly payments" from a credit card, car loan or a mortgage. Ex: You owe $1,000 on your credit card at 19% interest. You always pay 5 1485 words Ex English (India) Encue Crosetti's Electronics issues an $800,000, 8%, 10-year mortgage note on Dec 31, 2022, to help finance a plant expansion program. The terms of the note provide for annual installment payments of $119,224 each Dec 31. This problem directly applies to YOU if you have any "monthly payments" from a credit card, car loan or a mortgage. Ex: You owe $1,000 on your credit card at 19% interest. You always pay the "minimum monthly payment" of 2%... $20 per month. For 2 bonus points... Use this Debt Repayment Calculator to answer "How long will it take you to pay off this credit card? or copy/paste this link: https://www.myfinancialgoals.org/credit-card-minimum-payment- calculator?source=8552352600&network=g&campaign=957905197&adgroup=6146463 9320&matchtype=&keyword=&device=c&creative=324240436707&gclid=EAlalQobChM lornm24-e9glVph6tBh2VMAyoEAAYAIAAEgJjdvD BwE Your answer 14 years or 168 months = 2 bonus points IF correct Instructions (Round all computations to the nearest dollar.) (a) Prepare an "installment payments schedule" for the first four payments of the mortgage payable Annual Interest Cash Payment Interest Expense Reduction of Principal Principal Balance Period Issue Date 800,000 1 119,224 2 119,224 3 119,224 4 119,224 Issue date 1) Interest Expense = (Principal Bal x 8%) Issue date 1) Reduction of Principal = (Cash Pymt Int Exp) Issue date 1) Principal Balance = (Previous Principle - Reduction of Principal) 1485 words English (India) Focus working papers_Ch10 Compatibility Mode Draw Designt Layout References Mailings. Review View Tell me Share Arial 11 AA Aa A EEN "A A B I Ub x, x Styles Styles Dict Pane Outstanding shares Earnings per share Crosetti's Electronics issues an $800,000, 8%, 10-year mortgage note on Dec 31, 2022, to help finance a plant expansion program. The terms of the note provide for annual installment payments of $119,224 each Dec 31. This problem directly applies to YOU if you have any "monthly payments" from a credit card, car loan or a mortgage. Ex: You owe $1,000 on your credit card at 19% interest. You always pay the "minimum monthly payment" of 2%... $20 per month. For 2 bonus points... Use this Debt Repayment Calculator to answer "How long will it take you to pay off this credit card? or copy/paste this link: https://www.myfinancialgoals.org/credit-card-minimum-payment- I calculator?source=8552352600&network=g&campaign=957905197&adgroup-6146463 9320&matchtype=&keyword=&device=c&creative=324240436707&gclid=EAlalQobChM lomm24-e9glVph6tBh2VMAYOEAAYAIAAEqJjdvD BwE Your answer, 14 years or 168 months 2 bonus points IF correct Instructions (Round all computations to the nearest dollar.) (a) Prepare an "installment payments schedule" for the first four payments of the + mortgage payable Annual Interest Cash Payment Interest Expense Reduction of Principal Principal Balance Period Issue Date 800,000 1 119,224 2 119,224 3 119,224 4 119,224 1485 words English (India) Focus