Three Plans for Financing a $20,000,000 Corporation Are Under Consideration

Essay

Three plans for financing a $20,000,000 corporation are under consideration by its organizers. The bonds will be issued at their face value and the income tax rate is estimated at 20%. It is estimated that profit before interest and taxes will be $4,000,000.
Instructions
For each plan, determine the expected profit and the earnings per share. Prior to obtaining financing there are no common shares outstanding.