Question
Skysong, Inc. is considering these two alternatives to finance its construction of a new $1.40 million plant: There currently are 660,000 number of shares of
Skysong, Inc. is considering these two alternatives to finance its construction of a new $1.40 million plant: There currently are 660,000 number of shares of common stock outstanding.
1. | Issuance of 140,000 shares of common stock at the market price of $10 per share. | |
2. | Issuance of $1.40 million, 5% 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 | $1,560,000 | $1,560,000 | ||
Interest expense from bonds | enter a dollar amount | enter a dollar amount | ||
Income before income taxes | enter a dollar amount | enter a dollar amount | ||
Income tax expense (30%) | enter a dollar amount | enter a dollar amount | ||
Net income | $enter net income in dollars | $enter net income in dollars | ||
Outstanding shares | enter a dollar amount | $enter a dollar amount | ||
Earnings per share | $enter a dollar amount | $enter a dollar amount |
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