Lifo Inc. raises $4 million dollars by issuing bonds with an interest rate of 10%. Assuming income tax rate of 30%, 100,000 common shares issued, and an increase in net income of $1,000,000 due to the additional resources, what is the effect on earnings per share? ) $40 increase b) $28 increase c) $4.20 increase d) $7 increase
Lifo Inc. raises $4 million dollars by issuing bonds with an interest rate of 10%. Assuming income tax rate of 30%, 100,000 common shares issued, and an increase in net income of $1,000,000 due to the additional resources, what is the effect on earnings per share? ) $40 increase b) $28 increase c) $4.20 increase d) $7 increase
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 5P
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Lifo Inc. raises $4 million dollars by issuing bonds with an interest rate of 10%. Assuming income tax rate of 30%, 100,000 common shares issued, and an increase in net income of $1,000,000 due to the additional resources, what is the effect on earnings per share?
) $40 increase
b) $28 increase
c) $4.20 increase
d) $7 increase
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