QUESTION 1 (10 marks) In Langley, BC, the Fisher family owns 30 acres of land, on which they grow agricultural food products. They started off with blueberry farming, but are currently looking to plant trees which would be grown, cultivated and sold to residential and commercial customers. The Board of Directors, which are comprised of family members, believe that they could earn an additional $600,000 before interest and taxes with the tree business. However, they need $1,300,000 to make capital purchases (equipment) and this cannot be raised within the family. The current directors want to maintain family control of this business, but have not ruled out issuing shares to investors outside the family. There are 2 financing plans: 1. Plan A: Borrow at 7.5% 2. Plan B: Issue 9,000 of $6 pref shares - dividends are paid out after tax Current data After tax Net Income (2019) Common shares outstanding Income tax rate $500,000 15,000 25% Required Prepare an analysis to determine which plan would result in the highest EPS. (HINT: we