Question: please help with part 2, part 1 is done Rustic Campsites, Incorporated, is trying to decide between the following two alternatives to finance its new


Rustic Campsites, Incorporated, is trying to decide between the following two alternatives to finance its new $34 million gaming center: a. Issue $34 million, 6% note. b. Issue 1 million shares of common stock for $34 per share with expected annual dividends of $2.04 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Xnswer is not complete. Complete this question by entering your answers in the tabs below. Assuming the note or shares of stock are issued at the beginning of the year, complete the income 5 alternative. (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500 "Earnings per Share" to 2 decimal places.) Complete this question by entering your answers in the tabs below. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher carnings per share? (Enter vour answers in dollars, not millions ( 1.6.$5.5 million should be entered as 5,500,000 ))
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
