Mountain Homes is considering an expansion costing $5.7 million that will increase net income by $452,000. The company currently has 2.3 million shares outstanding and no debt. The stock sells for $38 per share and the book value per share is $27. The current net income is $1.02 million. Assume the firm issues new equity to fund this expansion while maintaining a constant price-earnings ratio. What will be the EPS after the new equity issue?

Multiple Choice

• $.60

• $.52

• $.44

• $.67

• $.55

Mountain Homes is considering an expansion costing $5.7 million that will increase net income by $452,000. The company currently has 2.3 million shares outstanding and no debt. The stock sells for $38 per share and the book value per share is $27. The current net income is $1.02 million. Assume the firm issues new equity to fund this expansion while maintaining a constant price-earnings ratio. What will be the EPS after the new equity issue? Multiple Choice $.60 $.52 $.44