Should new issue be undertaken based on earnings per share

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Reference no: EM131590543

The Hamilton Corporation has 4 million shares of stock outstanding and will report earnings of $6,360,000 in the current year. The company is considering the issuance of 2 million additional shares which can only be issued at $38 per share.

a. Assume the Hamilton Corporation can earn 7.00 percent on the proceeds. Calculate the earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. Should the new issue be undertaken based on earnings per share?

Yes

Reference no: EM131590543

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