Suppose Zack Corporation has net income of $550,000 and 200,000 common shares outstanding before a new project. The company needs $1,100,000 for expansion, and management is considering two financing plans: Plan 1 is to issue $1,100,000 of 11 percent bonds. Plan 2 is to issue 54,000 common shares for $1,100,000 Zack Corporation management believes the new cash can be invested in operations to earn income of $360,000 before interest and taxes. Given the corporation's tax rate of 40 percent, which is the better plan? Why? (Round earnings per share amounts to the nearest cent.) Plan 1 seems more favourable because it has an EPS of $ 7.66 which is higher than the EPS of Plan 2, which is $ 3.46. However, the company's ability to pay the interest on the bonds must also be considered