Question: R Company needs $ 2 , 0 0 0 , 0 0 0 to finance an expansion of plant facilities. The compans expects to earn

R Company needs $2,000,000 to finance an expansion of plant facilities. The compans expects to earn a return of 15% on this investment before considering the cost of capit or income taxes. The average income tax rate for the R Company is 40%. If the company raises the funds by issuing 6% bonds at face value, the earnings available to common stockholders after the new plant facilities are in operation may be expected to increase by
A. $65,000
B. $70,000
C. $108,000
D. $116,000
 R Company needs $2,000,000 to finance an expansion of plant facilities.

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