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American Health Systems currently has 5,600,000 shares of stock outstanding and will report earnings of $17 million in the current year. The company is
American Health Systems currently has 5,600,000 shares of stock outstanding and will report earnings of $17 million in the current year. The company is considering the issuance of 1,300,000 additional shares that will net $40 per share to the corporation. a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution per share b-1. Assume that American Health Systems can earn 6 percent on the proceeds of the stock issue in time to include them in the current year's results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b-2. Should the new issue be undertaken based on earnings per share? O No Yes
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Answer a Earnings 17000000 A Shares out standing 5600000 B EPS 304 AB Additio...Get Instant Access to Expert-Tailored Solutions
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