Campbell Inc.has net income of $500,000 and 200,000 shares of common stock.The company is considering a project which requires $800,000 and is considering two options:
Considering all relevant facts and figures,Campbell's management is of the opinion that the funds raised can be used to increase income before interest and taxes by $300,000 each year.The company estimates income tax expense to be 40%.Analyze the Campbell situation to determine which plan will result in higher earnings per share.
(Round your answers to two decimal points.)

Question

Campbell Inc.has net income of $500,000 and 200,000 shares of common stock.The company is considering a project which requires $800,000 and is considering two options:
  Considering all relevant facts and figures,Campbell's management is of the opinion that the funds raised can be used to increase income before interest and taxes by $300,000 each year.The company estimates income tax expense to be 40%.Analyze the Campbell situation to determine which plan will result in higher earnings per share.
(Round your answers to two decimal points.)

Quizplus · Accepted Answer

The Answer of Campbell Inc.has net income of $500,000 and 200,000 shares of common stock.The company is considering a project which requires $800,000 and is considering two options:
  Considering all relevant facts and figures,Campbell's management is of the opinion that the funds raised can be used to increase income before interest and taxes by $300,000 each year.The company estimates income tax expense to be 40%.Analyze the Campbell situation to determine which plan will result in higher earnings per share.
(Round your answers to two decimal points.)