APAP

Electronics is considering two plans for raising

$ $5$ comma $000$ comma $000$$$5,000,000$

to expand operations. Plan A is to issue

$55\%$

bonds$$ payable, and plan B is to issue

$100$ comma $000100,000$

shares of common stock. Before any new$$ financing,

APAP

Electronics has net income of

$ $300$ comma $000$$$300,000$

and

$700$ comma $000700,000$

shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of

$ $600$ comma $000$$$600,000$

before interest and taxes. The income tax rate is

$2121\%.$

Analyze the

APAP

Electronics situation to determine which plan will result in higher earnings per share. $($Complete all input fields. Enter a $0$ for any zero balances. Round earnings per share amounts to the nearest$$ cent.$)$

Question content area bottom

Part $1$

Begin by completing the analysis below for plan$$ A$,$ then plan B$.$

$$

Plan A: Issue $$5,000,000$

$$

of $5\%$ Bonds Payable

Net income before new project

$$

$$

Expected income on the new project before

$$

$$

interest and income tax expenses

$$

$$

Less: Interest expense

$$

$$

Project income before income tax

$$

$$

Less: Income tax expense

$$

$$

Project net income

$$

$$

Net income with new project

$$

$$

Earnings per share with new project:

$$

$$

Plan A

$$

$$

Plan B

$$

$$