Eagle Corp. needs to raise $$500,000$ to expand the company. Eagle Corp. is considering the issuance of either:

$$500,000$ of $8\%$ bonds payable at par to borrow the money; or

$50,000$ shares of common stock issued at $$10$ per share.

Before any new financing, Eagle Corp. expects to earn net income of $$300,000,$ and the company already has $100,000$ shares of common stock outstanding. Eagle Corp. believes the expansion will increase income before interest and income tax by $$100,000.$ The income tax rate is $30\%.$ Which choice of raising capital should Eagle Corp. use if they are concerned with earnings per share?

Eagle Corp. should issue $50,000$ shares of common stock since it will result in an earnings per share of $$3\mathrm{.}70.$

Eagle Corp. should borrow the money by issuing bonds payable since it will result in an earnings per share of $$3\mathrm{.}30.$

Eagle Corp. should issue $500,000$ shares of common stock since it will result in an earnings per share of $$1\mathrm{.}87.$

Eagle Corp. should borrow the money by issuing bonds payable since it will result in an earnings per share of $$3\mathrm{.}42.$

None of the above.