Question
Frontier City is trying to decide between the following two alternatives to finance its new $24 million roller coaster: a. Issue $24 million of 6%
Frontier City is trying to decide between the following two alternatives to finance its new $24 million roller coaster:
a. Issue $24 million of 6% bonds at face amount. b. Issue two million shares of common stock for $12 per share.
a. Assuming bonds or shares of stock are issued at the beginning of the year, complete the income statement listed below for each alternative. (Enter your answers in dollars, not in millions. Round your "Earnings per Share" to 2 decimal places.)
b. Which alternative results in the highest earnings per share? (Round your "Earnings per Share" to 2 decimal places.)
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