Wavetown Marina needs to raise $1.6 million to expand the company. Wavetown Marina is considering the issuance of either • $1,600,000 of 8% bonds payable, or • 100,000 common shares at $16 per share. A (Click the icon to view additional information.) Additional info Prepare an analysis to determine which plan is likely to result in higher eamings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Wavetown Marina? Before any new financing. Wavetown Marina expects to eam net income of $250,000, and the company already has 100,000 shares of common shares outstanding. Wavetown Marina believes the expansion will increase income before interest and income tax by $170.000. The income tax rate is 35%. Print Done Start by preparing the analysis to determine which plan is likely to result in higher earnings per share (EPS). (For amounts with a $0 balance, make sure to enter "0" in the appropriate column.) Plan 1 Plan 2 Issue $1,600,000 Issue $1,600,000 of 8% Bonds Payable of Common Shares Less: Less: Which financing plan would you recommend based solely on EPS?
Wavetown Marina needs to raise $1.6 million to expand the company. Wavetown Marina is considering the issuance of either • $1,600,000 of 8% bonds payable, or • 100,000 common shares at $16 per share. A (Click the icon to view additional information.) Additional info Prepare an analysis to determine which plan is likely to result in higher eamings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Wavetown Marina? Before any new financing. Wavetown Marina expects to eam net income of $250,000, and the company already has 100,000 shares of common shares outstanding. Wavetown Marina believes the expansion will increase income before interest and income tax by $170.000. The income tax rate is 35%. Print Done Start by preparing the analysis to determine which plan is likely to result in higher earnings per share (EPS). (For amounts with a $0 balance, make sure to enter "0" in the appropriate column.) Plan 1 Plan 2 Issue $1,600,000 Issue $1,600,000 of 8% Bonds Payable of Common Shares Less: Less: Which financing plan would you recommend based solely on EPS?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Question from accounting homework. Picture attached.
In first column of chart, here are the options to write:
- Earning per share after expansion
- Expected project income before income tax
- Expected project income before interest and income tax
- Expected projectnet income
- Income tax expense
- Interest expense
- Net income before expansion
- Total company net income
Transcribed Image Text:Wavetown Marina needs to raise $1.6 million to expand the company. Wavetown Marina is considering the issuance of either
$1,600,000 of 8% bonds payable, or
• 100,000 common shares at $16 per share.
A (Click the icon to view additional information.)
Additional info
Prepare an analysis to determine which plan is likely to result in higher earnings per share. Based solely on the earnings-per-share comparison, which financing plan would you recommend for Wavetown Marina?
Before any new financing, Wavetown Marina expects to earn net income of
$250,000, and the company already has 100,000 shares of common shares
outstanding. Wavetown Marina believes the expansion will increase income before
interest and income tax by $170,000. The income tax rate is 35%.
Print
Done
....
Start by preparing the analysis to determine which plan is likely to result in higher earnings per share (EPS). (For amounts with a $0 balance, make sure to enter "0" in the appropriate column.)
Plan 1
Plan 2
Issue $1,600,000
Issue $1,600,000
of 8% Bonds Payable
of Common Shares
Less
Less
Which financing plan would you recommend based solely on EPS?
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