Quisco Systems has 6.55 billion shares outstanding and a share price of $18.75. Quisco is considering developing a new networking product in-house at a cost of $494 mill absent the expense of the new technology. Quisco will have EPS of $0.83 a. Suppose Quisco develops the product in-house. What impact would the development cost have on Quisco's EPS? Assume all costs are incurred this year and are treated b. Suppose Quisco does not develop the product in-house but instead acquires the technology. What effect would the acquisition have on Quisco's EPS this year? (Note that 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 earnings? Is this method cheaper? Explain. a. Suppose Quisco develops the product in-house. What impact would the development cost have on Quisco's EPS? Assume all costs are incurred this year and are treated a If Quisco develops the product in-house, its earnings would million With no change to the number of shares outstanding, its EPS would by b. Suppose Quisco does not develop the product in-house but instead acquires the technology. What effect would the acquisition have on Quisco's EPS this year? (Note that ac expenses of its own, so that the only effect on EPS is due to the change in the number of shares outstanding) (Select from the drop-down menus) If Quinco acquires the technology for $896 million worth of its stock, it will issue million new shares. Since earnings without this transaction are c. Which method of acquiring the technology has a smaller impact on earnings? Is this method cheaper? Explain (Select all the choices that apply.) A Acquiring the technology would have a smaller impact on earnings, but this method is not cheaper B. Developing it in-house is less costly and provides an immediate tax beneft The earnings impact is not a good measure of the expense C. Because the acquisition permanently decreases the number of shares outstanding it will increase Quisco's eamings per share in future years as well D. Because the acquisition permanently increases the number of shares outstanding, it will reduce Quisco's earnings per share in future years as wel billion, its EPS wit oping a new networking product in-house at a cost of $494 million Alternatively, Quisco can acquire a firm that already has the technology for $096 million worth (at the current price) of Quisico stock Suppose that EPS? Assume all costs are incurred this year and are treated as an R&D expense, Quisco's tax rate ts 35%, and the number of shares outstanding is unchanged vould the acquisition have on Quisco'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 of 9 plain o's EPS? Assume all costs are incurred this year and are treated as an R&D expense. Quisce's tax rate is 35%, and the number of shares outstanding is unchanged (Select from the drop-down menus) he number of shares outstanding, its EPS would (Assume the new product would not change this year's revenues) would the acquisition have on Quisco'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 ng) (Select from the drop-down menus) Since earings without this transaction are Splain (Select all the choices that apply) is not a good measure of the expense Quisce's earings per share in future years as well Quisico's eamings per share in future years as well bilion, its EPS with the purchase is e Que Systems b Mai A Sport Supple spens - ASayee O the proteins w Deillag ind 88%. a pranama (duman er provides and deven can have on G's EPS Acc change to the m Expl The of the ang a of PS Sh bol desp Ex ting vd mature of the expense Shams (AMPO) Kg Supeta je nd ja mugitze ves compt) ugy yew? Pode hat ariston apenas 5 ore tady has the technology in the Queck Supp 35% and the af autumhi ang iya's