Question
JN Electronics is considering two plans for raising $1,000,000 to expand operations. plan A is to issue 7% bonds payable, and plan B is to
JN Electronics is considering two plans for raising $1,000,000 to expand operations. plan A is to issue 7% bonds payable, and plan B is to issue $500,000 shares of common stock. before any financing, SB Electronics has net income of $150,000 and 100,000 shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of $300,000 before interest and taxes. The income tax rate is 20%. Analyze the SB Electronics situation to determine which plan will result in higher earnings per share. Analyze the JN Electronics situation to determine which plan will result in higher earnings per share. (Complete all answer boxes. Enter "0" for any zero balances. Round earnings per share amount to the nearest cent.)
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