Income before interest and taxes, Accounting Basics

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Income before interest and taxes

Banks company is considering two alternative to finance its purchase of a new $4000000 office building.

(a) Issue 400000 ordinary shares at $10 per share.

(b) Issue 8%, 10-year bonds at($4,000,000)

Income before interest and taxes is expected to be $3.000.000.The company has a 30% tax rate and has 600000 ordinary shares outstanding prior to new financing.

Instructions:

Calculate each of the following for each alternative:

(1) Net income

(2) Earnings per share

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Accounting Basics: Income before interest and taxes

Reference No:- TGS056428

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Accounting Basics: Income before interest and taxes

Reference No:- TGS056428

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Recent Questions Asked Accounting Basics

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Ask an Expert for Answer!!

Accounting Basics: Income before interest and taxes

Reference No:- TGS056428

Recent Questions Asked Accounting Basics

Q : Retired bonds plus accrued interest

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