Problem 15-2 Dilution effect of stock issue [LO15-3]

The Hamilton Corporation has 3 million shares of stock outstanding and will report earnings of $6,850,000 in the current year. The company is considering the issuance of 2 million additional shares which can only be issued at $30 per share.

a. Assume the Hamilton Corporation can earn 7.00 percent on the proceeds. Calculate the earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share ______________ b. Should the new issue be undertaken based on earnings per share?

	No
	Yes