Should new issue be undertaken based on earnings per share

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American Health Systems currently has 6,000,000 shares of stock outstanding and will report earnings of $15 million in the current year. The company is considering the issuance of 1,500,000 additional shares the will net $50 per shares to the corporation. a. What is the immediate dilution potential for this new stock issue? b. Assume that American Health Systems can earn 12% 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: EM13279241

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