Calculate the expected changes to the companys earnings

Reference no: EM133611881

Case: Company C's capital includes $5 million in bonds and 8 million common shares with a market price of $60 per shares. The company has just announced a rights issue whereby an additional 2 million shares will be issued at a subscription price of $53 per share. The company's net income this year is $30 million. Your sister, who owns shares in the company, does not have the funds required to purchase the new shares and is concerned about the a possible decline in the company's earnings per share and P/E ratio after the rights issue.

Required: Calculate the expected changes to the company's earnings per share and P/E ratio after the rights issue.

Reference no: EM133611881

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