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Question: Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $25 million gaming center:

a. Issue $25 million of 6% bonds at face amount.

b. Issue 1 million shares of common stock for $25 per share.

Required: 1. Assuming bonds or shares of stock are issued at the beginning of the year, complete the income statement for each alternative.

2. Which alternative results in the highest earnings per share?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92330390

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