Rustic Campsites, Incorporated, is trying to decide between the following two alternatives to finance its new $$31$ million gaming center:

Issue $$31$ million, $6\%$ note.

Issue $1$ million shares of common stock for $$31$ per share with expected annual dividends of $$1\mathrm{.}86$ per share.

Required:

$1.$ Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative.

$2.$ Answer the following questions for the current year:

$($a$)$ By how much are interest payments higher if issuing the note?

$($b$)$ By how much are dividend payments higher by issuing stock?

$($c$)$ Which alternative results in higher earnings per share?Required $1$

Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. $($Enter your answers in dollars, not millions $($i$.$e$.,$ $$5\mathrm{.}5$ million should be entered as $5,500,000).$ Round your "Earnings per Share" to $2$ decimal places.$)$

$\backslash$table$[[,$Issue Note,Issue Stock$],[$Operating income,$$10,600,000,$$$,10,600,000],[$Interest expense $($on note only$),,],[$Income before tax,,$],[$Income tax expense $(30\%),,],[$Net income,$$,$$$],[$Number of shares,$3,600,000,4,600,000],[$Earnings per share $($Net income $/$ Number of shares$),,]]$