If a company wants to maximize earnings per share it would issue:
A)stock or bonds, depending on the tax rate.
B)stock or bonds, depending on the interest rate.
C)bonds instead of stock.
D)stock instead of bonds.

Question

Quizplus · Accepted Answer

Issuing bonds instead of stock can maximize earnings per share because interest payments on bonds are tax-deductible, reducing taxable income and potentially increasing net income available to shareholders. Additionally, issuing bonds does not dilute existing shareholders' equity.

If a Company Wants to Maximize Earnings Per Share It