Solar Energy Corp. has $9 million in earnings with three million shares outstanding. Investment bankers think the stock can justify a P/E ratio of 19. Assume the underwriting spread is 10 percent. What should the price to the public be? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Price =

Tyson Iron Works is about to go public. It currently has aftertax earnings of $5,500,000, and 3,700,000 shares are owned by the present stockholders. The new public issue will represent 500,000 new shares. The new shares will be priced to the public at $15 per share with a 2 percent spread on the offering price. There will also be $250,000 in out-of-pocket costs to the corporation.

a. Determine what rate of return must be earned on the proceeds to the corporation so there will be a 5 percent increase in earnings per share during the year of going public. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of return =