Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tyson Iron Works is about to go public. It currently has aftertax earnings of $4,000,000, and 4,000,000 shares are owned by the present stockholders. The

Tyson Iron Works is about to go public. It currently has aftertax earnings of $4,000,000, and 4,000,000 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 $20 per share with a 5 percent spread on the offering price. There will also be $260,000 in out-of-pocket costs to the corporation. c. Compute the earnings per share immediately after the stock issue. (Do not round intermediate calculations and round your answer to 2 decimal places.) d. Determine what rate of return must be earned on the net proceeds to the corporation so there will not be a dilution 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.) e. 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

American Public School Finance

Authors: William A. Owings, Leslie S. Kaplan

1st Edition

0495807834, 9780495807834

More Books

Students also viewed these Finance questions

Question

Write short notes on Interviews.

Answered: 1 week ago

Question

Define induction and what are its objectives ?

Answered: 1 week ago

Question

Discuss the techniques of job analysis.

Answered: 1 week ago