Calculate the current eps and p/e ratio

Reference no: EM131030252

Flyrite Company currently has net income of $9 million and 3 million common shares outstanding, which sell for $33/share. Flyrite has decided to issue new stock to raise $4,000,000 to expand its operations. Flyrite's investment banker will sell the stock for $29 with a spread of 7%. There will be a $60,000 additional registration cost.

a) Calculate the current EPS and P/E ratio.
b) How many shares will have to be sold to net $4 million?
c) Calculate the new EPS and stock price immediately after the sale if the P/E ratio remains constant. You may ignore the effect of the costs of the new issue on EPS, assuming instead that they have been accrued against earnings in performing this before-and-after analysis.

Reference no: EM131030252

Questions Cloud

Financial newspapers-midget widget was in financial trouble : Bill and Hillary are friends. Bill has recently retired and now has $450,000 in super. He asks Hillary, an accountant, if he should invest $200,000 of his super funds in Midget Widgets Ltd. Hillary tells Bill that she has looked at the accounts of th..

How films engage social concerns and have lasting effects : Based on the films you have watched and the ways you have learned to interpret meaning in them, discuss your ideas about how films engage social concerns and have lasting effects on society.

Discuss whether bill has any legal rights against hilary : Bill and Hillary are friends. Bill has recently retired and now has $450,000 in super. He asks Hillary, an accountant, if he should invest $200,000 of his super funds in Midget Widgets Ltd. Hillary tells Bill that she has looked at the accounts of th..

Discuss the security threats this type of technology creates : Given the shift toward mobile commerce, do a sear on "mobile commerce crime." Identify and discuss the security threats this type of technology creates. Present your vision of the new opportunities for cybercrime that mobile commerce may provide.

Calculate the current eps and p/e ratio : Flyrite Company currently has net income of $9 million and 3 million common shares outstanding, which sell for $33/share. Flyrite has decided to issue new stock to raise $4,000,000 to expand its operations. Flyrite's investment banker will sell the s..

Should be willing to bear in order to perform their chunking : Zipco is in serious negotiations to purchase a chunking machine that will enable them to perform their own chunking at $1.25 per unit. They currently have their chunking outsourced at a cost of $1.75 per unit and a fixed cost of $45,000. Their market..

A public offering of common stock : Dixon Corporation is considering a public offering of common stock. The firm will offer one million shares of common stock for sale. The estimated selling price is $45 per share, with Dixon Corp. receiving $40.50 per share after the offering. Additio..

Excel can be used to handle big data analytics well : Excel can be used to handle big data analytics well. There is no deference between .xls and .xlsx ?les. It is possible that an LP problem can have in?nite optional solutions. Level curve methods are as robust as corner point methods for solving two v..

What are target population groups : Sports: Alpine Skiing, Bowling, Equestrian, Goalball, Sledge Hockey, Wheelchair (WC) Basketball, (WC) Rugby, (WC) Tennis. What are target population groups? hat else do we need to know to get started?

User Account

All Pages