SG Electronics is considering two plans for raising $3,000,000 to expand operations. Plan A is to issue 6% bonds payable, and plan B is to issue 100,000 shares of common stock Before any new financing, SG has net income of $300,000 and 200,000 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 40%.

Requirement: Analyze SG Electronics