Sheridan Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1. Issue 84,900 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 9%, 10-year bonds at face value for $2,547,000. It is estimated that the company will earn $704,500 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 100,000 shares of common stock outstanding prior to the new financing. Determine the effect on net income and earnings per share for these two methods of financing.

Sheridan Alrliness considering two altermedves for the firanding of a purchase of a fleet of alpenes. These two alternatives are: 1. Iste 94.coarse af common stack at $30 p. (Cae dividende havarot been paid or is the payment of any contemplates.) 2. Isau 994, 10-year benda atace value for $2.547,000. It is stimated that the company will earn $704,509 bere interest and taxes ar a result of this purchase. The company has an estimated tax rate of 30% and has 109,000 as of comman stock outstanding prior ta the new financing Determine the effect on net Income and earnings per here for these two methods of financing. (Round carnings per share to 2 decimal places, c.g. 2.25.) Plan One Issue Stock Plan Two Issue Bends Net Income $ S Earrings per