Marines213
Nov 13, 2012, 01:19 PM
Burden Inc. is considering these two alternatives to finance its construction of a new $2000000 plant:
(a) Issuance of 200000 shares of common stock at the market price of $10 per share.
(b) Issuance of $2000000, 6% bonds at face value.
I have to complete a table:
Issue Stock Issue Bond
Income before interest and taxes
Interest expense from bonds
Income before income taxes
Income tax expense (30%)
Net income $ $
Outstanding shares 700000
Earnings per share $ $
(a) Issuance of 200000 shares of common stock at the market price of $10 per share.
(b) Issuance of $2000000, 6% bonds at face value.
I have to complete a table:
Issue Stock Issue Bond
Income before interest and taxes
Interest expense from bonds
Income before income taxes
Income tax expense (30%)
Net income $ $
Outstanding shares 700000
Earnings per share $ $