Current Attempt in Progress

Cullumber Inc. is considering two alternatives to finance its construction of a new $$1\mathrm{.}90$ million plant.

$($a$)$ Issuance of $190,000$ shares of common stock at the market price of $$10$ per share.

$($b$)$ Issuance of $$1,900,000,6\%$ bonds at face value.

Complete the following table. $($Round earnings per share to $2$ decimal places, e$.$g$.0\mathrm{.}25.)$

Indicate which alternative is preferable.

Net income is

if stock is used. However, earnings per share is

than earnings per share if bonds are used

because of the additional shares of stock that are outstanding.

eTextbook and Media