Fifo Inc. raises $4 million dollars by issuing shares of common stock. The market rate of interest is 10% at the time of issue. Assuming a corporate income tax rate of 30%, 100,000 common shares issued, and an increase in net income of $1,000,000 due to the additional resources, what is the effect on earnings per share? a. $40 increase  b. $28 increase  c. $4.20 increase  d. $7 increase

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Fifo Inc. raises $4 million dollars by issuing shares of common stock. The market rate of interest is 10% at the time of issue. Assuming a corporate income tax rate of 30%, 100,000 common shares issued, and an increase in net income of $1,000,000 due to the additional resources, what is the effect on earnings per share?

a. $40 increase 

b. $28 increase 

c. $4.20 increase 

d. $7 increase 

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