JO Electronics is considering two plans for raising $ 5 comma 000 comma 000 to expand operations. Plan A is to issue 6 % bonds payable, and plan B is to issue 200 comma 000 shares of common stock. Before any new financing, JO Electronics has net income of $ 400 comma 000 and 600 comma 000 shares of common stock outstanding. Management believes the company can use the new funds to earn additional income of $ 800 comma 000 before interest and taxes. The income tax rate is 40 %. Analyze the JO Electronics situation to determine which plan will result in higher earnings per share
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Home » Business » JO Electronics is considering two plans for raising $ 5 comma 000 comma 000 to expand operations. Plan A is to issue 6 % bonds payable, and plan B is to issue 200 comma 000 shares of common stock.