Quince Systems has 6.3 billion shares outstanding and a share price of $18.17. Olso considering developing a new networking product in house at a cost of $12 milion. Alternatively, Ousce can cream that already has the technology for $939 milion worth (at the current price of Quisco vock. Suppose that on the expense of the new technology, Quisce will have EPS of 60.00 - Suppose Ouisco develops the product in house. What impact would the development cost have on Qusco's EPS7 Assume al costs are curred this year and werewed as an RAD expens, Quisco's tax rate is 36%, and the number of shares outstanding is unchanged 6. Suppose Quisco does not develop the product in house but instead guires the technology. What effect would the acquisition have on Quisico's EPs this year? (Note that acquisition experies do not appear drecey on the income statement Assume the firm was acquired at the start of the year and has no revenues or expenses of its own, so that the only effect on EPS is due to the change in the number of shares outstanding) c. Which method of acquiring the technology has a smaller impact on caminge?is is method cheaper? Explain Suppose Quince develops the product in house. What impact would the development cont haven Guaco EPS? Assume al costs are curred this year and are treated as an RAD experts, Outco's tax rate 35%, and the number of shares outstanding is unchanged Quisco's new EPS would be $(Round to the nearest cent) O 2-14 Sitial toj Question Help Quinco Systems has 6.3 billion shares outstanding and a share price of $18.17. Quisco is conside ing new networking product in house at a cost of $512 milion. Alamatively, Quisco can acquire a fim that already has the technology for $939 milion worth the current price of Qusco stock. Supposent the expense of the new technology. Quisce will have EPS of 0.19 a. Suppose Quince develops the product in house. What impact would the development cost haveise's EPS Assume all costs are incurred this year and are treated as an R&D expense, Quince's tax rate is 36%, and the number of shares outstanding is unchanged b. Suppose Quisce does not develop the product in house but insteadquires the technology. What affect would the acquisition have on Quico's EPs this year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its own, at the only effect on EPS is due to the change in the number of shares outstanding.) Which method of acquiring the technology has a smaller impact on earings? Is this method cheaper? Explain a. Suppose Quisco develops the product in house. What impact would the development cost have on Quico's EPS? Assumelos are incurred is year and we treated as an RAD expense, Quisco's tax rates 36%, and the number of shares outstanding is unchanged Quisco's new EPS would be $(Round to the nearest cent)
