From Question Revised

$'000 $'000
Operating Profit 3,450 4,026 3,450 4,026
Interest 200 392 200 392
Profit Before Tax 3,250 3,634 3,250 3,634
Tax @ 20% 650 727 650 727
Profit After Tax 2,600 2,907 2,600 2,907

Ordinary @ $0.50 Shares 5,000 5,000 5,000 5,000

Number of shares 10,000 10,000 10,000 10,000

Raising $3,200,000 by issuing bonds @ annual interest of 6%

Funds raised would earn a before-tax return of 18% per year

Earnings Per Share 0.2600 0.2907 0.2600 0.2907

In cents 26 29.07 26 cents per share 29.1 Cents per share
Interest Cover 17.25 10.27 17 10