Brief Exercise 10-15 Moby Inc. is considering two alternatives to finance its construction of a...
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Brief Exercise 10-15 Moby Inc. is considering two alternatives to finance its construction of a new $1 million plant. (a) Issuance of 100,000 shares of common stock at the market price of $10 per share. (b) Issuance of $1 million, 8% bonds at face value. Complete the following table.(Round earnings per share to 2 decimal places, e.g. 0.25 Issue Stock Issue Bond Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (40%) Net income $620,000 $620,000 520,000 Outstanding shares Earnings per share Indicate which alternative is preferable. Net income is if stock is used. However, earnings per share isthan earnings per share if bonds are used because of the additional shares of stock that are outstanding
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