he Wrigley Corporation needs to raise $32 million. The investment banking firm of Tinkers, Evers & Chance will handle the transaction.

a. If stock is utilized, 1,800,000 shares will be sold to the public at $19.40 per share. The corporation will receive a net price of $18.00 per share. What is the percentage underwriting spread per share? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If bonds are utilized, slightly over 32,400 bonds will be sold to the public at $1,002 per bond. The corporation will receive a net price of $995 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

__________________________

Kevins Bacon Company Inc. has earnings of $5 million with 2,500,000 shares outstanding before a public distribution. Four hundred thousand shares will be included in the sale, of which 200,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her.

The net price from the offering will be $19.50 and the corporate proceeds are expected to produce $1.1 million in corporate earnings.

a. What were the corporations earnings per share before the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. What are the corporations earnings per share expected to be after the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.)