geraldvance
Nov 19, 2010, 10:27 PM
Burden Inc. is considering these two alternatives to finance its construction of a new $2 million plant:
(a) Issuance of 200,000 shares of common stock at the market price of $10 per share.
(b) Issuance of $2 million, 6% bonds at face value.
Complete the table. (If answer is zero, please enter 0, do not leave any fields blank. Round earnings per share to 2 decimal places, e.g. 2.25.)
Issue Stock Issue Bond
income before interest and taxes 1,500,000 1,500,000
interest expense from bonds 0 ?
income before income taxes ? ?
income tax expense (30%) ? ?
net income ? ?
outstanding shares ? 700,000
earnings per share ? ?
please help I have no idea how to do this!
(a) Issuance of 200,000 shares of common stock at the market price of $10 per share.
(b) Issuance of $2 million, 6% bonds at face value.
Complete the table. (If answer is zero, please enter 0, do not leave any fields blank. Round earnings per share to 2 decimal places, e.g. 2.25.)
Issue Stock Issue Bond
income before interest and taxes 1,500,000 1,500,000
interest expense from bonds 0 ?
income before income taxes ? ?
income tax expense (30%) ? ?
net income ? ?
outstanding shares ? 700,000
earnings per share ? ?
please help I have no idea how to do this!