Larkspur, Inc.currently has 720,000 shares of common stock outstanding. Larkspur, Inc. is considering these two alternatives to finance its construction of a new $1.70 million plant:

1.		Issuance of 170,000 shares of common stock at the market price of $10 per share.
2.		Issuance of $1.70 million, 6% bonds at face value.

Complete the table. (Round earnings per share to 2 decimal places, e.g. $2.66.)

		Issue Stock		Issue Bonds
Income before interest and taxes		$1,620,000		$1,620,000
Interest expense from bonds
Income before income taxes
Income tax expense (40%)
Net income		$		$
Outstanding shares				720,000
Earnings per share		$		$

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Indicate which alternative is preferable. Issuance of bondsIssuance of stock is preferable.