Pharoah Airlines is considering these two alternatives for financing the purchase of a fleet of...
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Pharoah Airlines is considering these two alternatives for financing the purchase of a fleet of airplanes. Issue shares of common stock at $ per share. Cash dividends have not been paid, nor is the payment of any contemplated. Issue year bonds at face value for $ It is estimated that the company will earn $ before interest and taxes as a result of this purchase. The company has an estimated tax rate of and has shares of common stock outstanding prior to the new financing. Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year. Start with Income Before Interest and Taxes. Round earnings per share to decimal places, eg $ Start with Income Before Interest and Taxes. Plan One Issue Stock Issue Stock Income Before Interest and Taxes $ $ Plan Two Issue Bonds 
Pharoah Airlines is considering these two alternatives for financing the purchase of a fleet of airplanes.
Issue shares of common stock at $ per share. Cash dividends have not been paid, nor is the payment of any
contemplated.
Issue year bonds at face value for $
It is estimated that the company will earn $ before interest and taxes as a result of this purchase. The company has an
estimated tax rate of and has shares of common stock outstanding prior to the new financing.
Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds
will be outstanding for the entire year. Start with Income Before Interest and Taxes. Round earnings per share to decimal places,
eg $ Start with Income Before Interest and Taxes.
Plan One
Issue Stock
Issue Stock
Income Before Interest and Taxes
$
$
Plan Two
Issue Bonds
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