SUBJECT IS VENTURE CAPITAL AND PRIVATE EQUITY 10 MARKS QUESTION

Caterpillar Company Inc. has earnings of $12 million with 3,500,000 shares outstanding before public distribution. Nine hundred thousand shares will be included in the sale, of which 500,000 are new corporate shares, and 400,000 are shares currently owned by Venture Capitalist(VC). The 400,000 shares that the VC is selling are referred to as a secondary offering, and all proceeds will go to them. The net price from the offering will be $18.25, and the corporate proceeds are expected to produce $2.2 million in corporate earnings. a. What were the corporation's earnings per share before the offering? b. What are the corporation's earnings per share expected to be after the offering? (10 marks)