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Northern Airlines is about to go public. It currently has aftertax earnings of $4,500,000 and 3,400,000 shares are owned by the present shareholders. The new
Northern Airlines is about to go public. It currently has aftertax earnings of $4,500,000 and 3,400,000 shares are owned by the present shareholders. The new public issue will represent 400.000 new shares. The new shares will be priced to the public at $10 per share with a 3 percent spread on the offering price. There will also be $180,000 in out-of-pocket costs to the corporation a. Compute the net proceeds to the Northern Airlines Net proceeds b. Compute the EPS immediately before the stock issue (Round the final answer to 2 decimal places.) EPS c. Compute the EPS immediately after the stock issue (Round the final answer to 2 decimal places.) EPS $ d. Determine what rate of return must be earned on the net proceeds to the corporation so that there will not be a dilution in EPS during the year of going public (Round the intermediate calculations and the final answer to 2 decimal places.) Rate of retum e. Determine what rate of return must be earned on the proceeds to the corporation so that there will be a 10 percent increase in EPS during the year of going public (Round the intermediate calculations and the final answer to 2 decimal places.) Rate of return
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