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Shamrock, Inc. is considering these two alternatives to finance its construction of a new $1.65 million plant: 1. Issuance of 165,000 shares of common stock

Shamrock, Inc. is considering these two alternatives to finance its construction of a new $1.65 million plant:

1. Issuance of 165,000 shares of common stock at the market price of $10 per share.
2. Issuance of $1.65 million, 6% bonds at face value.

(a)

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

Issue Stock

Issue Bonds

Income before interest and taxes

$1,595,000 $1,595,000

Interest expense from bonds

enter a dollar amount enter a dollar amount

Income before income taxes

enter a subtotal of the two previous amounts

enter a subtotal of the two previous amounts

Income tax expense (40%)

enter a dollar amount enter a dollar amount

Net income

$enter a total net income

$enter a total net income

Outstanding shares

enter a number of shares

660,000

Earnings per share

$enter earnings per share rounded to 2 decimal places $enter earnings per share rounded to 2 decimal places

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