The Pipen Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $250,000 in 2019 and that the expansion will provide additional operating income of $75,000 in 2019.

Plan 1: Issue 10,000 additional shares of common stock for $20 per share

Plan 2: Issue $200,000 in 20-year, 12% bonds payable.

a. Compare these option, assuming a 30% income tax rate:

b. Which option will contribute more net income in 2019? Which option provides the highest EPS?