BTN$9-3.$ Business Decision Problem Kingston Corporation has total assets of $$5,200,000$ and has been earning an average of $$800,000$ before income taxes the past several years. The firm is planning to expand plant facilities to manufacture a new product and needs an additional $$2,000,000$ in funds, on which it expects to earn $18$ percent before income tax. The income tax rate is expected to be $40$ percent for the next several years. The firm has no long$-$term debt outstanding and presently has $75,000$ shares of common stock outstanding. The firm is considering three alternatives:

Obtain the $$2,000,000$ by issuing $25,000$ shares of common stock at $$80$ per share.

Obtain the $$2,000,000$ by issuing $$1,000,000$ of ten percent, $20-$year bonds at face value and $12,500$ shares of common stock at $$80$ per share.

Obtain the $$2,000,000$ by issuing $$2,000,000$ of ten percent, $20-$year bonds at face value.