Northern Airlines is about to go public. It currently has aftertax earnings of $5,300,000 and 3,700,000 shares are owned by the present shareholders. The new public issue will represent 700,000 new shares. The new shares will be priced to the public at $20 per share, with a 5 percent spread on the offering price. There will also be $190,000 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 return %

e. Determine what rate of return must be earned on the proceeds to the corporation so that there will be a 15 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 %