Table 15-8
Uptown Inc. pays income tax at the rate of 30%. The president is considering an investment in new factory equipment of $500,000. He expects the income before taxes from the investment to be $55,000 annually. One option is to raise the money by issuing bonds that have a stated interest rate of 7%. Alternatively, Uptown Inc. can raise the $500,000 by issuing 100,000 common shares. Currently there are 200,000 common shares outstanding. The current annual net income(after interest and income tax), before considering the investment, is $730,000 per year.
-Refer to Table 15-8.What is the earnings per common share if 100,000 common shares are issued?

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The Answer of Table 15-8
Uptown Inc. pays income tax at the rate of 30%. The president is considering an investment in new factory equipment of $500,000. He expects the income before taxes from the investment to be $55,000 annually. One option is to raise the money by issuing bonds that have a stated interest rate of 7%. Alternatively, Uptown Inc. can raise the $500,000 by issuing 100,000 common shares. Currently there are 200,000 common shares outstanding. The current annual net income(after interest and income tax), before considering the investment, is $730,000 per year.
-Refer to Table 15-8.What is the earnings per common share if 100,000 common shares are issued?

Table 15-8 Uptown Inc. Pays Income Tax at the Rate of 30