Chapter 09 ezto.mheducatio tpx?-0.6736926988090739 1512574595623 The following i

Question

Chapter 09 ezto.mheducatio tpx?-0.6736926988090739 1512574595623 The following information applies to the questions disployed below Penny Arcades, Inc, is trying to decide between the following two alternatives to finance its new $3 millon Issue $30 million of 5% bonds at face amount. b. Issue 1 million shares of common stock for $30 per share References Section Break LOS- You did not receive full credit for 0.50 points Exercise 9-1 Part 1 Required 1. Assuming bonds or shares of stock are issued at the beginning of the year complet 600 0t Round vour"Farnings ger Share" to 2 decimal places. Round your "Earnings per S

Explanation / Answer

Issue Bonds Issue Stock Operating income 10500000 10500000 Interest expense (bonds only) 1500000 0 Income before tax 9000000 10500000 Income tax expense (40%) 3600000 4200000 Net income 5400000 6300000 No of shares 3500000 4500000 Earnings per share 1.54 1.40

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