Space Inc. requires $250,000,000 to fund two new long-haul space-bound aircraft. As part of this requirement, the CEO and CFO have been considering the issuance of common shares into the marketplace. They have been advised that they can expect to raise the required equity portion of 75% of the project by issuing shares. To accomplish this they will have to agree to a 8.0% spread between the Underwriter's price and the Retail price. As well, the new shares will need to be issued at a $2.40 discount from the current market price. Current investors are not happy as they claim this issuance of shares is dilutive to their current position. You have been asked to prepare the supporting analysis: Current financial information gathered you: Market price of shares:$40.00 Issued and outstanding:20,000,000 Current Net earnings:$28,000,000 Incremental earnings forecast:$7,200,000 

REQUIRED: (show all calculations) a)You have been asked to calculate the: 

1) Total proceeds required at the retail level 

2) Underwriter’s total differential earnings 

3) Underwriters return percentage 

4) An analysis to assess the dilutive effects to current shareholders if project is successful. The illustration of the dilutive effect should compare the current results against both immediate issuance and post earnings expectations.