Larkspur, Inc.currently has 720,000 shares of common stock outstanding. Larkspur, Inc. is considering these two alternatives to finance its...
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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 $ $

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