First, complete the table below. (Complete all answer boxes. Enter a "0" for any zero amounts. Round the earnings per share amounts to the nearest cent.) Plan 1 Plan 2 $ 270,000 $ 270,000 Net income before new project Expected income on the new project before interest and income tax expenses 85,000 85,000 Less: Interest expense 0 46,800 Project income before income tax 85,000 38,200 Less: Income tax expense 25500 11460 Project net income Net income with new project Earnings per share with new project: Enter any number in the edit fields and then click Check Answer. ? 1 part Clear All Final Check remaining Requirement 8. The Kinston Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $270,000 in 2019 and that the expansion will provide additional operating income of $85,000 in 2019. The company intends to sell the shares of treasury stock, so use issued shares for the analysis rather than current shares outstanding. Compare these options, assuming a 30% income tax rate: Plan 1: Issue 5,000 additional shares of common stock for $36 per share. Plan 2: Issue $260,000 in 10-year, 18% bonds payable. Which option will contribute more net income in 2019? Which option provides the highest EPS? First, complete the table below. (Complete all answer boxes. Enter a "0" for any zero amounts. Round the earnings per share amounts to the nearest cent.) Plan 1 Plan 2 Net income before new project 270,000 270,000 Expected income on the new project 85,000 85,000 before interest and income tax expenses 0 Less: Interest expense 46,800 Project income before income tax 85,000 38,200 25500 11460 Less: Income tax expense Enter any number in the edit fields and then click Check Answer. ? 1 part Clear All Final Check remaining First, complete the table below. (Complete all answer boxes. Enter a "0" for any zero amounts. Round the earnings per share amounts to the nearest cent.) Plan 1 Plan 2 $ 270,000 $ 270,000 Net income before new project Expected income on the new project before interest and income tax expenses 85,000 85,000 Less: Interest expense 0 46,800 Project income before income tax 85,000 38,200 Less: Income tax expense 25500 11460 Project net income Net income with new project Earnings per share with new project: Enter any number in the edit fields and then click Check Answer. ? 1 part Clear All Final Check remaining Requirement 8. The Kinston Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $270,000 in 2019 and that the expansion will provide additional operating income of $85,000 in 2019. The company intends to sell the shares of treasury stock, so use issued shares for the analysis rather than current shares outstanding. Compare these options, assuming a 30% income tax rate: Plan 1: Issue 5,000 additional shares of common stock for $36 per share. Plan 2: Issue $260,000 in 10-year, 18% bonds payable. Which option will contribute more net income in 2019? Which option provides the highest EPS? First, complete the table below. (Complete all answer boxes. Enter a "0" for any zero amounts. Round the earnings per share amounts to the nearest cent.) Plan 1 Plan 2 Net income before new project 270,000 270,000 Expected income on the new project 85,000 85,000 before interest and income tax expenses 0 Less: Interest expense 46,800 Project income before income tax 85,000 38,200 25500 11460 Less: Income tax expense Enter any number in the edit fields and then click Check Answer. ? 1 part Clear All Final Check remaining
