Splish Brothers Inc. is considering these two alternatives to finance its construction of a new $2.00 million plant: There currently are 780,000 number of shares of common stock outstanding.

1.		Issuance of 200,000 shares of common stock at the market price of $10 per share.
2.		Issuance of $2.00 million, 5% bonds at face value.

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

		Issue Stock		Issue Bonds
Income before interest and taxes		$1,680,000		$1,680,000
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

B-Indicate which alternative is preferable. select an option ( Issuance of stock - issuance of bonds) is preferable.