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Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $20 million gaming center: a. Issue $20 million, 6% note. b. Issue 1 million shares of common stock for $20 per share with expected annual dividends of $1.20 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000).) a. By how much are interest payments higher if issuing the note? b. By how much are dividend payments higher by issuing stock? c. Which alternative results in higher earnings per share? Issue note Show less A

Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $20 million gaming center: a. Issue $20 million, 6% note. b. Issue 1 million shares of common stock for $20 per share with expected annual dividends of $1.20 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000).) a. By how much are interest payments higher if issuing the note? b. By how much are dividend payments higher by issuing stock? c. Which alternative results in higher earnings per share? Issue note Show less A

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hi, I need help solving for Req 1, and cells A and B of Req 2. Thank you.
Required 1 Required 2 Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (on note only) Income before tax Income tax expense (30%) Net income Number of shares Earnings per share (Net income / Number of shares) Issue Note $ $ < Required 1 9,500,000 Issue Stock $ 0 $ 2,500,000 9,500,000 0 3,500,000 Required 2 >
Transcribed Image Text:Required 1 Required 2 Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (on note only) Income before tax Income tax expense (30%) Net income Number of shares Earnings per share (Net income / Number of shares) Issue Note $ $ < Required 1 9,500,000 Issue Stock $ 0 $ 2,500,000 9,500,000 0 3,500,000 Required 2 >
Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $20 million gaming center: a. Issue $20 million, 6% note. b. Issue 1 million shares of common stock for $20 per share with expected annual dividends of $1.20 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000).) a. By how much are interest payments higher if issuing the note? b. By how much are dividend payments higher by issuing stock? c. Which alternative results in higher earnings per share? Issue note Show less A
Transcribed Image Text:Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $20 million gaming center: a. Issue $20 million, 6% note. b. Issue 1 million shares of common stock for $20 per share with expected annual dividends of $1.20 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? (Enter your answers in dollars, not millions (i.e., $5.5 million should be entered as 5,500,000).) a. By how much are interest payments higher if issuing the note? b. By how much are dividend payments higher by issuing stock? c. Which alternative results in higher earnings per share? Issue note Show less A
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