Dammer Corporation needs to raise $2,200,000. The corporation plans to sell 5%, 10-year bonds at the face value of $2,200,000. Dammer Corporation currently has 120,000 shares of stock outstanding and net income of $1,200,000. The $2,200,000 from the bond sale is expected to generate additional income of $1,000,000 before interest and taxes. The income tax rate is 20%. What are the earnings per share after the sale of bonds? (Round your final answer to the nearest cent.)

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The correct answer is B: $15.93.The earnings per share after the sale of bonds can be calculated as follows:EPS = (Net income + Interest expense - Taxes) / Number of shares outstandingNet income = $1,200,000 + $1,000,000 = $2,200,000Interest expense = $2,200,000 x 5% = $110,000Taxes = ($2,200,000 - $110,000) x 20% = $420,000Number of shares outstanding = 120,000EPS = ($2,200,000 + $110,000 - $420,000) / 120,000 = $15.93

Dammer Corporation Needs to Raise $2,200,000