Campbell,Inc

question 68

Essay

Campbell,Inc.has net income of $500,000 and 200,000 shares of common stock.The company is considering a project that requires $800,000 and is considering two options:
• Option 1 is to borrow $800,000 at 12%.
• Option 2 is to issue 100,000 shares of common stock for $800,000.
Considering all relevant facts and figures,Campbell's management is of the opinion that the funds raised can be used to increase income before interest and taxes by $300,000 each year.The company estimates income tax expense to be 40%.Analyze the Campbell situation to determine which plan will result in higher earnings per share.(Round your answers to two decimal points.)

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Definitions:

Core Time

The period during a workday in which all employees are required to be at work, typically to ensure overlapping work hours for collaboration.

Management by Objectives

A management strategy in which employees set goals that align with the organization's objectives, improving performance and motivation.

Manager-Employee Interactions

The dynamics and communications that take place between managers and their employees in the workplace.

Core Time

Defined periods during the working day when employees are required to be at work, facilitating a common schedule for collaboration while allowing some flexibility.