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View Policies Current Attempt in Progress Cullumber Inc. is considering two alternatives to finance its construction of a new $2.60 million plant. (a) Issuance of
View Policies Current Attempt in Progress Cullumber Inc. is considering two alternatives to finance its construction of a new $2.60 million plant. (a) Issuance of 260,000 shares of common stock at the market price of $10 per share. (b) Issuance of $2,600,000, 7% bonds at face value. Complete the following table. (Round eamings per share to 2 decimal places, e.g. 0.25.) F ir Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (35%) Net income Outstanding shares Earnings per share $ Indicate which alternative is preferable. Net income is $760,000 $760,000 $ 500,000 if stock is used. However, earnings per share is than earnings per share if bonds are used because of the additional shares of stock that are outstanding. Search A
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