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See below. Last question options are higher or lower. Brief Exercise 15-10 Sunland Inc. is considering two alternatives to finance its construction of a new
See below. Last question options are "higher" or "lower".
Brief Exercise 15-10 Sunland Inc. is considering two alternatives to finance its construction of a new $1.50 million plant. (a) Issuance of 150,000 shares of common stock at the market price of $10 per share. (b) Issuance of $1,500,000, 7% 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 $600,000 $600,000 Interest expense Income before income taxes Income tax expense (35%) Net income Outstanding shares 450,000 Earnings per share Indicate which alternative is preferable. Net income is if stock is used. However, earnings per share is than earnings per share if bonds are used because of the additional shares of stock that are outstandingStep by Step Solution
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