Find the immediate dilution potential

Assignment Help Financial Accounting
Reference no: EM1314357

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: EM1314357

Questions Cloud

Calculate the adjacent matrix and find its inverse : Calculate the adjacent matrix and find its inverse.
Computation of current yield and ytm and bond price : Computation of current yield and YTM and bond price and Assume that the yield to maturity remains constant for the next 3 years
Determine frames division''s contribution margin : Determine Frames Division's contribution margin for this product and What amount would be considered the maximum price (ceiling) in this example and what price would be the maximum price (floor)
Standard deviation of the population : This distribution is positively skewed. The standard deviation of the population is not known.
Find the immediate dilution potential : Find the immediate dilution potential for this new stock issue and Should the new issue be undertaken based on earnings per share?
Computation of value of bond : Computation of value of bond and What is the value of an individual bond from this issue to an investor who purchases the Wilson bond on the date of issue
Research question development : Develop the management-research question hierarchy that   will help you to develop a specific proposal.
Evaluate the full unit product costs for widgets : Evaluate the full unit product costs for Widgets and Gadgets using the traditional costing system and Find the full unit product costs for Widgets and Gadgets using the ABC system.
Calculation of yield to maturity : Calculation of yield to maturity and The bond has an 8 percent semiannual coupon and a par value of $1,000

Reviews

Write a Review

Financial Accounting Questions & Answers

  Journalize the activities from job cost sheets

Journalize the activities from job cost sheets in the general journal. Also journalize the other costs that occurred during this period of time.

  Why the irs disputed the gleason''s characterization

Describe why the Gleasons felt that their exchange of property was a 1031 transaction. Why the IRS disputed the Gleason's characterization

  Relationship between labor variance and overhead variance

Describe the relationship between the labor efficiency variance and the variable overhead efficiency variance.

  Show the influence on the optimal dividend policy

Myron Gordon and John Lintner believe that the re­quired return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption

  Prepare the necessary journal entries for stone company

Prepare the necessary journal entries for Stone Company

  Prepare the current liability howell company''s balance sheet

Prepare the current liability section of Howell Company's balance sheet, assuming $25,000 of the mortgage is payable next year. Comment on Howell's liquidity, assuming total current assets are $450,000.

  Calculate the book value of machine

Calculation of book value of machine - what will be the machine's book value as of December31, 2008?

  Check which of the expenses are deductible

Recognize which of these expenses are deductible and the amount that is deductible. Show whether they are deductible for or from AGI.

  Make balance sheet for forgetful insurance company

Evaluate each of the following ratios using the "unadjusted" data as provided in column "F". For additional practice, recompute the ratios using the data you generate for the other columns.

  Determine the retained earnings on december

Computation of retained earnings using given information and evaluate the retained earnings on December 31, 2005, and 2006.

  Purpose journal entry

What loss, if any, could Sound Audio report in its 2013 income statement? What liability, if any, should Sound Audio report in its 2013 balance sheet?

  Evaluate the chmelar manufacturing cost

Evaluate the Chmelar Manufacturing  cost. Chmelar Manufacturing Company developed the following data:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd