Moby Inc. is considering two alternatives to finance its construction of a new $2 million plant. (a) Issuance of 200,000 shares of common stock at the market price of $10 per share. (b) Issuance of $2 million, 8% bonds at face value. Complete the following table. (Round earnings per share to 2 decimal places, e.g. 0.25.) Issue Stock Issue Bond Income before interest and taxes $700,000 $700,000 Interest expense from bonds Income before income taxes Income tax expense (30%) Net income $ $ Outstanding shares 500,000 Earnings per share $ $ Indicate which alternative is preferable.

Brief Exercise 10-16 Moby Inc. is considering two alternatives to finance its construction of a new $2 million plant. (a) (b) Issuance of 200,000 shares of common stock at the market price of $10 per share. Issuance of $2 million, 8% bonds at face value. Complete the following table. (Round earnings per share to 2 decimal places, e.g. 0.25.) Issue Stock $700,000 Issue Bond $700,000 Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (30%) Net income Outstanding shares 500,000 Earnings per share Indicate which alternative is preferable. 'than earnings per share if bonds are used because of the additional shares of stock that are outstanding. Net income is if stock is used. However, earnings per share is Click if you would like to Show Work for this question: Open Show Work