Determine the immediate dilution effect

Reference no: EM1349361

The Hub corporation currently has 4 million shares of stocks outstanding and will report earnings of 6 million in the current year. The company is considering the issuance of 1 million additional shares that will net $30 per share to the corporation.

1. What is the immediate dilution effect for this new stock issue?

2. Assume the company can earn 10.5 % on the proceeds of the stock issue in time to include them in the current years' results.

3. If the million additional shares can only be issued at $23 and the company can place 6% on the proceeds, should the new issue be undertaken based on the EPS?

Reference no: EM1349361

Questions Cloud

Explain what is your definition of compensation : Explain What is your definition of compensation and Which meaning of compensation seems most appropriate from an employee's view: return, reward, or entitlement? Why?

Perceptions of self-efficacy : What are the differences in perceptions of self-efficacy among counseling students in online and land-based counseling graduate degree programs?

Organizational change - going digital : What roles might you play and what do you think are some of the key challenges facing human service organizations today

Significant invention which shaped society today : Pondering history of technology development, decide what you think was the most significant invention previous to the 1600s which has shaped society today. Explain your decision.

Determine the immediate dilution effect : The Hub corporation currently has four million shares of stocks outstanding and will report earnings of 6 million in the current year. The company is planning the issuance of one million additional shares that will net $30 per share to the corporatio..

Compute the following arguments and decide : Compute the following arguments and decide whether they are sound. Are the premises upon which these arguments based sound?

Steps to implementing organizational change : Responsibilities of managers to implement sudden, drastic organizational changes within their scope of responsibility with references APA format

Practice in forensic counseling specialty : Then, explain how this design might be used to inform practice in forensic counseling specialty.

Calculate dollar return and rate of return : Suppose that $10,000 was invested in stock of General Medical Company with the intention of selling after one year. The stock pays no dividends, so entire return will be based on price of the stock when sold.

User Account

All Pages