A company with EBIT of $5,000,000 is considering two financing alternatives. The first alternative would have $23 million of bonds at 7% interest and 900,000 common shares outstanding, whereas the second would have $45 million of bonds at 7% interest and only 700,000 shares outstanding. The company is in the 35% tax bracket.
Required:
	B.  Construct the bottom half of the income statement (including EPS) for each alternative if EBIT increases by 25%.
Your answers to this open-ended assignment should be placed in the space below this line.
B			Alternative #!	Alternative #2
	EBIT
	Interest
	Earnings before taxes
	Income tax
	Net income
	Number of shares outstanding
	Earnings per share

Note: Please put your answers only in the section below the Bold Red sentence at the end of the Required section below.

Answer rating: 100% (QA)

Alternative 1 EBIT 5000000 125 6250000 Interest 23000... View the full answer