What will projected eps be next year

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Reference no: EM13292150

Farar, Inc. projects operating income of $4 million next year. The firm's income tax rate is 40%. Farar presently has 750,000 shares of common stock, no preferred stock, and no debt. The firm is considering the issuance of $6 million of 10% bonds to finance a new product that is not expected to generate an increase in income for two years. If Farar issues the bonds this year, what will projected EPS be next year?

A) $1.53
B) $1.98
C) $2.33
D) $2.72
E) $3.12

please show work

Reference no: EM13292150

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