Speedtown Marina needs to raise $$1\mathrm{.}0$ million to expand the company. The company is considering issuing either:

$$1,000,000$ of $7\%$ bonds payable to borrow the money; or $-150,000$ shares of common stock at $$7$ per share.

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Start by preparing the analysis to determine which plan is likely to result

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Before any new financing, Speedtown expects to earn net income of $$200,000,$ and the company already has $100,000$ shares of common stock outstanding. Speedtown believes the expansion will increase income before interest and income tax by $$100,000.$ The company's income tax rate is $30\%.$

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