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 $4,200,000, and 4.100.000 shares are owned by the present stockholders. The

image text in transcribed
Tyson Iron Works is about to go public. It currently has aftertax earnings of $4,200,000, and 4.100.000 shares are owned by the present stockholders. The new public issue will represent 200,000 new shares. The new shares will be priced to the public at $25 per share with a 4 percent spread on the offering price. There will also be $220,000 in out of pocket costs to the corporation a. Compute the net proceeds to Tyson Iron Works. (Do not round Intermediate calculations and round your answer to the nearest whole dollar.) Net proceeds b. Compute the earnings per share immediately before the stock issue. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share c. Compute the comings per share immediately after the stock issue. (Do not round Intermediate calculations and round your answer to 2 decimal places.) Earnings per share 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.) Rate of return e. Determine what rate of return must be earned on the proceeds to the corporation so there will be a 10 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 %

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

Small Business Finance And Valuation

Authors: Rick Nason, Dan Nordqvist

1st Edition

1952538122, 9781952538124

More Books

Students also viewed these Finance questions