Rerum IC Exercise 9-1A Compare financing alternatives (L09-1) [The following information applies to the questions...
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Rerum IC Exercise 9-1A Compare financing alternatives (L09-1) [The following information applies to the questions displayed below.) Penny Arcades, Inc. is trying to decide between the following two alternatives to finance its new $27 million gaming center: a. Issue $27 million, 5% note. b. Issue 1 million shares of common stock for $27 per share. Exercise 9-1A Part 1 Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answers in dollars, not millions.(i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Answer is complete but not entirely correct. Issue Note Issue Stock Operating income S 10,200,000 $ 10,200,000 Interest expense (not only) - 135,000 0 Income before tax $10,065,000 $ 10.200.000 Income tax expenso (40%) 4,026,000 4,080.000 Net Income $ 6,039,000 $ 6,120,000 Number of shares 3.200.000 4,200,000 Earnings per share (Not income / of shares) S 1.89 1.46 @ >>
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