Speedtown Marina needs to raise $3 million to expand the company. Speedtown Marina is considering the issuance

Question:

Speedtown Marina needs to raise $3 million to expand the company.
Speedtown Marina is considering the issuance of either:
$3,000,000 of 8% bonds payable to borrow the money, or
100,000 shares of at $30 per share.
Before any new financing, Speedtown Marina expects to earn net income of $300,000, and the company already has 100,000 shares of outstanding. Speedtown Marina believes the expansion will increase income before interest and income tax by $500,000. The income tax rate is 35%.
Prepare an analysis to determine which plan is likely to result in the higher earnings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Speedtown Marina?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...