Question: DW Electronics is considering two plans for raising $3,000,000 to expand operations. Plan A is to issue 8% bonds payable, and plan B is to
DW Electronics is considering two plans for raising $3,000,000 to expand operations. Plan A is to issue 8% bonds payable, and plan B is to issue 200,000 shares of common stock. Before any new financing, DW Electronics has net income of $250,000 and 600,000 shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of $500,000 before interest and taxes. The income tax rate is 21%. Analyze the DW Electronics situation to determine which plan will result in higher earnings per share. (Complete all answer boxes. Enter " 0 " for any zero balances. Round earnings per share amounts to the nearest cent.) Begin by completing the analysis below for plan A, then plan B
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