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current price ) of Quisco stock. Suppose that absent the expense of the new technology, Quisco will have EPS of $ 0 . 7 8
current price of Quisco stock. Suppose that absent the expense of the new technology, Quisco will have EPS of $
the start of the year and has no revenues or expenses of its own, so that the only effect on EPS is due to the change in the number of shares outstanding.
c Which method of acquiring the technology has a smaller impact on earnings? Is this method cheaper? Explain.
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c Which method of acquiring the technology has a smaller impact on earnings? Is this method cheaper? Explain. Select all the choices that apply.
A Acquiring the technology would have a smaller impact on earnings, but this method is not cheaper.
B Developing it inhouse is less costly and provides an immediate tax benefit. The earnings impact is not a good measure of the expense.
C Because the acquisition permanently decreases the number of shares outstanding, it will increase Quisco's earnings per share in future years as well.
D Because the acquisition permanently increases the number of shares outstanding, it will reduce Quisco's earnings per share in future years as well.
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