Kingbird Inc. is considering these two alternatives to finance its construction of a new $1.57 million plant: 1. issuance of 157,000 shares of common stock at the market price of $10 per share. 2. issuance of $1.57 million, 5% bonds at face value. Which of the following options is a correct statement regarding the financing alternatives?
1) Issuance of shares of common stock will result in dilution of ownership.
2) Issuance of bonds will result in higher interest expense.
3) Issuance of shares of common stock will result in higher interest expense.
4) Issuance of bonds will result in dilution of ownership.