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How do you calculate the  Outstanding shares for the Issue stock?

How do you calculate the  Outstanding shares for the Issue stock?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On this question I took the $600000 Bond issue and multiplied times 7%.  THen I subtracted it from the Income before taxes.  How do you calculate the  Outstanding shares for the Issue stock?  The Outstanding Bonds was provided.  There is no balance sheet to go off of.   The fields I can't figure out are in yellow.  Any help is appreciated.

Romanov Inc. is considering two alternatives to finance its construction of a new $1.40 million plant. Issuance of 140,000 shares of common stock at the market price of $10 per share. Issuance of $1,400,000, 7% bonds at face value. (a) (b) Issue Stock Issue Bond Income Before Interest and Taxes $ 600,000.00 600,000.00 DInterest expense from bonds $ 7% 3 Income Before Income Taxes 600,000.00 5 Income Tax Expense Tax (40%) 40% $ 240,000.00 9 Net Income $ 360,000.00 2 Outstanding Shares 460,000 GIVEN in 5 Earnings per Share Higher Lower select an option Higher Lower e Net income is select an option select an option if stock is used. However, earnings per share is O than earnings per share if bonds are used because of the additional shares of stock that are outstanding.
Transcribed Image Text:Romanov Inc. is considering two alternatives to finance its construction of a new $1.40 million plant. Issuance of 140,000 shares of common stock at the market price of $10 per share. Issuance of $1,400,000, 7% bonds at face value. (a) (b) Issue Stock Issue Bond Income Before Interest and Taxes $ 600,000.00 600,000.00 DInterest expense from bonds $ 7% 3 Income Before Income Taxes 600,000.00 5 Income Tax Expense Tax (40%) 40% $ 240,000.00 9 Net Income $ 360,000.00 2 Outstanding Shares 460,000 GIVEN in 5 Earnings per Share Higher Lower select an option Higher Lower e Net income is select an option select an option if stock is used. However, earnings per share is O than earnings per share if bonds are used because of the additional shares of stock that are outstanding.
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