Question
X Company needs to raise $10 million and is considering two options: issue $10 million in common stock January 1, 2021 or $10 million in
X Company needs to raise $10 million and is considering two options: issue $10 million in common stock January 1, 2021 or $10 million in bonds at an interest rate of 5% on January 1, 2015. Income before Interest and Taxes under either scenario is $2,000,000. The tax rate is 15%. On December 31st, 2021, the difference in Net Income between the two options will be:
- $150,000.
- $500,000.
- $75,000.
- $425,000
Which number is correct?
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
16th Edition
324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140
