The Tims Corporation expects earnings of $8,000,000 in the current year on 6,000,000 shares of common stock. The company is considering the effects on expected earnings of issuing an additional 2,000,000 shares of common stock.
(a) What will be the initial dilution in earnings per share if the new stock is issued?
(b) If the firm sells the sock for a net price of $23 per share and is able to earn 60% after tax on the proceeds before the end of the year, what will be the earnings per share?
Solution Preview
The Tims Corporation expects earnings of $8,000,000 in the current year on 6,000,000 shares of common stock. The company is considering the effects on expected earnings of issuing an additional 2,000,000 shares of common stock.
(a) What will be the initial dilution in earnings per share if the new stock is issued?
You can find the initial earnings per ...
Solution Summary
This solution explains:
1) How to calculate the dilution affect on a stock based on new stock being issued.
2) How to calculate earnings per share of a stock.
... Variable Call Value Put Value Stock price (↑) Increase Decrease. ... Variable Call Value Put Value Stock price (↑) Increase Decrease. ...
Fit autoregressive model to GE stock price under different order. Problem 16.30 GE.xls Autoregression. ... So the equation is stock price=2.975+0.925(Lag1). ...
Calculating required rate of return, present value, stock price. ... 3. Suppose the firm's expected growth rate is 5% now, what is the price of the stock? ...
Payout stock price, calculate ratios, growth rate, merger facts. 8. Cash Dividends. The stock of Payout Corp. ... a. What price is Payout stock selling for today? ...
... $2 Dividend for next year= Div1 = 1.90 =(1+(-5.%)) *2 Cost of equity= r= 15% growth rate of dividends/earnings= g= -5% Current stock price= Po= Plugging in the ...
... You will use both the CAPM (Capital Asset Pricing Model) and the Constant Growth Model (CGM) to arrive at IBM's stock price. ...Stock price = Industry PE x EPS. ...
