The immediate dilution potential for this new stock issue

Assignment Help Financial Management

Reference no: EM13727423

Louisiana Timber Company currently has 5 million shares of stock outstanding and will report earnings of $9 million in the current year. The company is considering the issuance of 1 million additional shares that will net $40 per share to the corporation.

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

b. Assume the Louisiana Timber Company can earn 11 percent on the proceeds of the stock issue in time to include them in the current year’s results. What is the new earnings per share?

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

Reference no: EM13727423

Questions Cloud

What price must you expect frostville stock : Assume Corporation has a current stock price of $50 and will pay a $1.5 dividend in one year; its equity cost of capital is 12%. What price must you expect Frostville stock to sell for immediately after the firm pays the dividend in one year to justi..

Prepare a product launch plan : Create a product launch plan to include the following components in plan: roduct identification and Justification for your choice of product

What is the bonds value : A US Industries bond has an 8 percent coupon rate and a $1,000 face value. Interest is paid semi-annually, and the bond has 20 years to maturity. If investors require a 10 percent yield to maturity, what is the bond’s value?

Bill gates is interested in developing vaccines : Bill Gates is interested in developing vaccines. His foundation supports the Global Alliance for Vaccine Development (GAVI). He would be very interested in funding projects that provide novel delivery mechanisms for vaccines. Frederica has alwa..

The immediate dilution potential for this new stock issue : Louisiana Timber Company currently has 5 million shares of stock outstanding and will report earnings of $9 million in the current year. The company is considering the issuance of 1 million additional shares that will net $40 per share to the corpora..

Summarize what you think are the most important pieces : Summary and paraphrase this paragraph- summarize what you think are the most important pieces of information that you gleaned from the textbook- read the book closely and put it in your own words.

Principal of the loan and how much will go toward interest : You have just taken out a $22,000 car loan with a 6% APR, compounded monthly. The loan is for five years. When you make your first payment in one month, how much of the payment will go toward the principal of the loan and how much will go toward inte..

How would you market the health care services : Assume that you were a successful Director of Marketing at a hospital in Houston. Who, what, when, where, why, and how would you market the health care services

Transforming employee performance through effective feedback : 1. A brief overview of each of the eight mistakes most common mistakes made in providing feedback 2. An explanation of how each mistake impacts the employee

User Account

All Pages