Shaff er Ltd. is considering two alternatives to finance its construction of a new €2 million plant.
a. Issuance of 200,000 ordinary shares at the market price of €10 per share.
b. Issuance of €2 million, 6% bonds at face value.
Complete the following table, and indicate which alternative is preferable.

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Issue Bonds Issue Shares Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (30%) Net income €900,000 €900,000 € € Outstanding shares Earnings per share 500,000 € €