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What would the earnings per share be immediately

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Question - Walker Machine Tools has 6.5 million shares of common stock outstanding. The current market price of Walker common stock is $72 per share rights-on. The company's net income this year is $22.50 million. A rights offering has been announced in which 650,000 new shares will be sold at $66.50 per share. The subscription price plus seven rights is needed to buy one of the new shares.

Required -

a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering?

b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering?

Reference no: EM133025749

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