Emron Inc. is considering these two alternatives to finance its construction of a new $2.00 milion plant:
1. Issuance of 200,000 shares of common stock at the market price of $10 per share.
2. Issuance of $2.00 million, 6% bonds at face value.
Complete the table. (Round earnings per share to 2 decimal places, e.g. $2.66.)
Issue Stock
Issue Bonds
Income before interest and taxes
$1,500,000 $1,500,000
Interest expense from bonds
enter a dollar amount enter a dollar amount
Income before income taxes
enter a dollar amount
enter a dollar amount
Income tax expense (30%)
enter a dollar amount enter a dollar amount
Net income
$enter a dollar amount
$enter a dollar amount
Outstanding shares
enter a number of shares
700,000
Earnings per share
$enter a dollar amount $enter a dollar amount