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Top management of Crane company is considering two alternative capital structures for 2 0 2 7 . The first ( the no debt structure

Top management of Crane company is considering two alternative capital structures for 2027. The first (the "no debt" structure)
would be to have $1,020,000 in assets and $1,020,000 in stockholders' equity, with 39,000 shares outstanding the entire year. This is
the structure the company had on December 31,2026. Alternatively, on January 1,2027, the company could issue $370,000 in debt
at 6% interest (the "with debt" structure) and immediately use the proceeds to repurchase 19,500 shares of stock for $390,000. The
expected amount of net income (ignoring taxes), prior to any interest costs, is $102,000 for 2027.
Assume the company pays dividends on common stock equal to its net income each year. Also, assume the accrued interest on the
debt was paid at December 31,2027, and the company has no other debt outstanding at year-end.
Also, assume the company has $1,020,000 in assets at both the beginning and the end of 2027.
(a)
Your answer is correct.
Compute the company's net income and earnings per share under both structures. (Ignore income taxes in your computations.)
(Round earnings per share to 2 decimal places, e.g.2.66.)
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Attempts: unlimited
(b)
Compute the company's return on common stockholders' equity and return on assets under both structures. (Round answers to 2
decimal places, e.g.2.66%.)
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