United Health is considering two alternatives for the financing of some high technology medical equipment. These two alternatives are:

1. Issue 50,000 common shares at $ 50 per share.

2. Issue $ 2,500,000, 5%, 10-year bonds at face value.

It is estimated that the company will earn $ 900,000 before interest and taxes as a result of acquiring the medical equipment.

The company has an estimated tax rate of 30% and has 100,000 common shares issued prior to the new financing.

Required:

Determine the effect on profit and earnings per share for these two methods of financing.