Zybeck Corp. projects operating income of $4 million next year. The firm’s
income tax rate is 40%. Zybeck presently has 750,000 shares of common
stock outstanding which have a market value of $10 per share, no preferred
stock, and no debt. The firm is considering two alternatives to finance a new
product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of
60,000 new shares of common stock. If Zybeck issues common stock this
year, what will projected EPS be next year?