Immediate dilution potential for new stock issuenbsp1

Assignment Help Financial Accounting

Reference no: EM13356574

Immediate dilution potential for new stock issue.

1. Hamilton Control Systems will invest $90,000 in a temporary project that will generate the following cash inflows for the next three years.

Year	Cashflow
1	$23,000
2	38,000
3	60,000

The firm will be required to spend $15,000 to close down the project at the end of three year. If the cost of capital is 10 percent, should the investment be undertaken? Use the net present value method.

2. The Hamilton Corporation currently has 4 million shares of stock outstanding and will report earnings of $6,000,000 in the current year. The company is considering the issuance of 1 million additional shares that will net $30 per share to the corporation.

a. What is the immediate dilution potential for this new stock issue?

b.Assume the Hamilton Corporation can earn 10.5 percent on the proceeds of the stock issue in time to include them in the current year's results. Should the new issue be undertaken based on earnings per share?

Reference no: EM13356574

Questions Cloud

Classification of cash flow activitiesany given transaction : classification of cash flow activities.any given transaction may affect a statement of cash flows using the indirect

Prepare an income statement through gross profitat the end : prepare an income statement through gross profit.at the end of truly department stores fiscal year on december 31 2007

Assigning responsibilities in various responsibility : assigning responsibilities in various responsibility centers.for each responsibility center described below indicate

Fixing transfer pricing with and without idle capacitythe : fixing transfer pricing with and without idle capacity.the frames n more corporation has three divisions frames

Immediate dilution potential for new stock issuenbsp1 : immediate dilution potential for new stock issue.nbsp1. hamilton control systems will invest 90000 in a temporary

Determining the cost of the product under abc costing and : determining the cost of the product under abc costing and traditional costing method.your company makes both widgets

Cost of equity at constant growth rate with capmcurrent per : cost of equity at constant growth rate with capm.current per share market price 20.25 current per share dividend 1.12

Calculation of applied manufacturing overhead based on : calculation of applied manufacturing overhead based on direct labor hour rate.1. baka corporation applies manufacturing

Square footage requirements and effective utilizationyour : square footage requirements and effective utilization.your firm is preparing to open a new retail strip mall and you

User Account

All Pages