Larkspur, Inc.currently has 720,000 shares of common stock outstanding. Larkspur, Inc. is considering these two alternatives to finance its construction of a new $1.70 million plant: 1. Issuance of 170,000 shares of common stock at the market price of $10 per share. 2. Issuance of $1.70 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 $1,620,000 $1,620,000 Interest expense from bonds Income before income taxes Income tax expense (40%) Net income $ $ Outstanding shares 720,000 Earnings per share $ $
Larkspur, Inc.currently has 720,000 shares of common stock outstanding. Larkspur, Inc. is considering these two alternatives to finance its construction of a new $1.70 million plant: 1. Issuance of 170,000 shares of common stock at the market price of $10 per share. 2. Issuance of $1.70 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 $1,620,000 $1,620,000 Interest expense from bonds Income before income taxes Income tax expense (40%) Net income $ $ Outstanding shares 720,000 Earnings per share $ $
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 2P
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