Electronics is considering two plans for raising $ $5$ comma $000$ comma $000$ to expand operations. Plan A is to issue $10\%$ bonds$$ payable, and plan B is to issue $300$ comma $000$ shares of common stock. Before any new$$ financing, CL Electronics has net income of $ $400$ comma $000$ and $200$ comma $000$ shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of $ $800$ comma $000$ before interest and taxes. The income tax rate is $21\%.$ Analyze the CL 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.$)$

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Part $1$

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

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

Plan B: Issue $$5,000,000$

of $10\%$ Bonds Payable

of Common Stock

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

Part $2$

$$

Plan A

Plan B

will result in higher earnings per share.