Business College

Louisiana Timber Company currently has 5 million shares of stock outstanding and will report earnings of $6.32 million in the current year. The company is considering the issuance of 1 million additional shares that will net $35 per share to the corporation. a. What is the immediate dilution potential for this new stock issue?

Answers

Answer 1

Answer:

0.214 per share

Explanation:

Calculation to determine the immediate dilution potential for this new stock issue

First step is to calculate the EPS before issuance

EPS before issuance = 6.32 / 5

EPS before issuance= 1.264

Second step is to calculate the EPS after new share issue

EPS after new share issue = 6.32 / (5+1)

EPS after new share issue=6.32/6

EPS after new share issue= 1.05

Now let calculate the Dilution potential

Dilution potential = 1.264 - 1.05

Dilution potential = 0.214 per share

Therefore the immediate dilution potential for this new stock issue is 0.214 per share

Related Questions

The following is selected information from Windsor, Inc. for the fiscal year ending October 31, 2022. Cash received from customers $129000 Revenue recognized 193500 Cash paid for expenses 73100 Cash paid for computers on November 1, 2021 that will be used for 3 years 20640 Expenses incurred including any depreciation 102340 Proceeds from a bank loan, part of which was used to pay for the computers 43000 Based on the accrual basis of accounting, what is Windsor's net income for the year ending October 31, 2022

Answers

You add and divide them by 129000

Difine the following
1 operetional cost
2 social cost and
3 complementary goods

Answers

Answer:

1. expenses related to the operation of a business

2.sum of the private costs resulting from a transaction

3. complementary good is a good whose appeal increases with the popularity of its complement.

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