Solution 166 (5 min.) Issue Stock Issue Bonds Income before interest and taxes $2,000,000 $2,000,000 Interest ($5,000,000 x 9%) 0 450,000 Income before income taxes 2,000,000 1,550,000 Income tax expense (30%) 600,000 465,000 Net income (2) $1 400,000 51 085,000 Outstanding shares (b) 1,200,000 700,000 Earnings per share (a) + (b) $1.17 $1.55