Shamrock, Inc.currently has 650,000 shares of common stock outstanding. Shamrock, Inc. is considering these two alternatives to finance its construction of a new $1.35 millionplant:

1.Issuance of135,000shares of common stock at the market price of $10per share.

2.Issuance of $1.35 million,6% bonds at face value.

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

Issue Stock Issue Bonds

Income before interest and taxes $1,550,000 $1,550,000

Interest expense from bonds

Income before income taxes

Income tax expense (40%)

Net income

Outstanding shares 650,000

Earnings per share

Indicate which alternative is preferable: Issuance of bonds OR stock