Wavetown Marina needs to raise $$2\mathrm{.}0$ million to expand the company. The company is considering issuing either:

$$2,000,000$ of $8\%$ bonds payable to borrow the money; or

$150,000$ shares of common stock at $$13$ per share.

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Read the requirements.

Stalt by preparing the analysis to determine which plan is likely to result in higher earnings per share $($EPS$).($For amounts with a $$0$ balance, make sure to enter $"0"$ in the appropriate column.$)$

More info

Before any new financing, Wavetown expects to earn net income of $$400,000,$ and the company already has $100,000$ shares of common stock outstanding. Wavetown believes the expansion will increase income before interest and income tax by $$200,000.$ The company's income tax rate is $30\%.$

Requirements

Prepare an analysis to determine which plan is likely to result in the higher earnings per share. Based solely on the earnings$-$per$-$share comparison, which financing plan would you recommend for Wavetown?