- Your answer is partially correct. Sandhill Co. is considering these two alternatives for financing the purchase of a fleet of airplanes. 1. Issue 61,000 shares of common stock at $45 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 14%, 10-year bonds at face value for $2,745,000. It is estimated that the company will earn $821,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 40% and has 92,100 shares of common stock outstanding prior to the new financing Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year. (Round earnings per share to 2 decimal places, eg. $2.66.) Plan One Issue Stock Plan Two Issue Bonds Income Before Interest and Taxes 821000 821000 Interest 384300 i Income Before Taxes 821000 436700 Income Tax Expense 328400 328400 i 492600 174680 i 262020 Net Income /(Loss) # $ 492600 $ Plan One Issue Stock Plan Two Issue Bonds Income Before Interest and Taxes 821000 821000 Interest | 384300 i Income Before Taxes 821000 436700 Income Tax Expense 328400 328400 i 174680 i Net Income /(Loss) 492600 262020 Outstanding Shares 92100 Outstanding Shares Earnings Per Share Earnings Per Share C $ C