What is the immediate dilution potential for this new stock

Assignment Help Financial Management

Reference no: EM131972075

Louisiana Timber Company currently has 5 million shares of stock outstanding and will report earnings of $6.99 million in the current year.

The company is considering the issuance of 2 million additional shares that will net $36 per share to the corporation.

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

b-1. Assume the Louisiana Timber Company can earn 11.40 percent on the proceeds of the stock issue in time to include it in the current year's results. Calculate earnings per share. Earnings per share

b-2. Should the new issue be undertaken based on earnings per share? Yes No

Reference no: EM131972075

Questions Cloud

Find the mean for the number of correct answers : On a multiple choice test with 17 questions, each question has four possible answers, one of which is correct. For students who guess at all answers

Confidence interval estimate : Assuming that the populations in Table 1 are normally distributed (allowing the use of the Z distribution) with equal population variances

Explain the purpose of a cash flow statement : Explain the purpose of a cash flow statement and how it reflects the firm's financial status. Include important points that an analyst would use in assessing.

What business expense amount can ryan deduct for the trips : Ryan can provide written documentation of the business purpose for trips totaling 4,040 miles. What business expense amount can Ryan deduct for these trips?

What is the immediate dilution potential for this new stock : Louisiana Timber Company currently has 5 million shares of stock outstanding and will report earnings of $6.99 million in the current year.

How a stop-loss hedging scheme can be implemented : Explain how a stop-loss hedging scheme can be implemented for a writer of an out-of-the-money call option. Why does it provide a relatively poor hedge?

Create part of the data dictionary : Create part of the data dictionary needed by the systems analyst working on the Worlds Trend project - Create an XML with sample data for one person placing

What total amount of bond interest expense will be recognize : What total amount of bond interest expense will be recognized over the life of these bonds? Total bond interest expense over life of bonds: Amount repaid.

Calculate depreciation cost per mile using unit-of-activity : Rosco Taxi Service uses the units-of-activity method in computing depreciation. Calculate depreciation cost per mile using unit-of-activity method.

User Account

All Pages