How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Linda_us Your Own Question

Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7291
Experience:  Post Graduate Diploma in Management (MBA)
Type Your Homework Question Here...
Linda_us is online now
A new question is answered every 9 seconds

The Tims Corporation expects earnings of $8,000,000 in the

Resolved Question:

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?
Submitted: 7 years ago.
Category: Homework
Expert:  Linda_us replied 7 years ago.
HICustomerbr />
(a) Current EPS is 8,000,000/6,000,000= $1.33

After issue of 2,000,0000 additional share
EPS=8,000,000/(6,000,000+2,000,000)=$1 Per share

(b) So additional proceed genarated=23*2,000,000=$46,000,000

Increase in Earning (After Tax) = 46,000,000*60%=27,600,000

Earning Per share=($8,000,000+27,600,000) / (2,000,000+6,000,000)
EPS= $4.45


Customer: replied 7 years ago.
Can you include an explanation/formulas used? Thanks!
Expert:  Linda_us replied 7 years ago.

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Linda_us and 2 other Homework Specialists are ready to help you

Related Homework Questions