Speegleville Marina needs to raise $0.8 million to expand the company. Speegleville Marina is considering the issuance of either - $800,000 of 7% bonds payable, or • 100,000 common shares at $8 per share. (Click the icon to view additional information.) Prepare an analysis to determine which plan is likely to result in higher earnings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Speegleville Marina? Start by preparing the analysis to determine which plan is likely to result in higher earnings per share (EPS). (For amounts with a $0 balance, make sure to enter "0" in the appropriate column. Round earnings per share to the nearest cent.) Net income before expansion Expected project income before interest and income tax Less: Interest expense Expected project income before income tax Less: Income tax expense Expected project net income Total company net income Earnings per share after expansion Which financing plan would you recommend based solely on EPS? Plan 1 Issue $800,000 of 7% Bonds Payable 200000 200000 200000 60000 200000 340000 Plan 2 Issue $800,000 of Common Shares 200000 56000 144000 43200 200000 200000 300800 3.008
Speegleville Marina needs to raise $0.8 million to expand the company. Speegleville Marina is considering the issuance of either - $800,000 of 7% bonds payable, or • 100,000 common shares at $8 per share. (Click the icon to view additional information.) Prepare an analysis to determine which plan is likely to result in higher earnings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Speegleville Marina? Start by preparing the analysis to determine which plan is likely to result in higher earnings per share (EPS). (For amounts with a $0 balance, make sure to enter "0" in the appropriate column. Round earnings per share to the nearest cent.) Net income before expansion Expected project income before interest and income tax Less: Interest expense Expected project income before income tax Less: Income tax expense Expected project net income Total company net income Earnings per share after expansion Which financing plan would you recommend based solely on EPS? Plan 1 Issue $800,000 of 7% Bonds Payable 200000 200000 200000 60000 200000 340000 Plan 2 Issue $800,000 of Common Shares 200000 56000 144000 43200 200000 200000 300800 3.008
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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