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The Hamilton Corporation has 3 million shares of stock outstanding and will report earnings of $6,880,000...

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Finance

The Hamilton Corporation has 3 million shares of stockoutstanding and will report earnings of $6,880,000 in the currentyear. The company is considering the issuance of 3 millionadditional shares that can only be issued at $33 per share.


a. Assume the Hamilton Corporation can earn 6.00percent on the proceeds. Calculate the earnings per share.(Do not round intermediate calculations and round youranswer to 2 decimal places.)
  



b. Should the new issue be undertaken based onearnings per share?

Answer & Explanation Solved by verified expert
4.4 Ratings (1117 Votes)
The immediate dilution potential for the new stock will be calculated by finding the difference between earnings per share before stock issue and earnings per share after the    See Answer
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