Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Kevin's Bacon Company Inc
Kevin's Bacon Company Inc. has earnings of $7 million with 2,500,000 shares outstanding before a public distribution. Eight hundred thousand shares will be included in the sale, of which 500,000 are new corporate shares, and 300,000 are shares currently owned by Ann Fry, the founder and CEO. The 300,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her.
The net price from the offering will be $18.50 and the corporate proceeds are expected to produce $1.4 million in corporate earnings.
a. What were the corporation's earnings per share before the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Earnings per share
b. What are the corporation's earnings per share expected to be after the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Earnings per share
Expert Solution
a.)
Earning per share before the public issue = EBIT/ no of shares outstanding
= 7000000/2500000
= 2.8 per share
b.)
Earning per share after public issue = EBIT+ proceeds from new issue/ no of shares outstanding+ new shares issued
=( 7000000+1400000) / (2500000+500000)
= 2.8
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
