Walker Machine Tools has 6 2 million shares of common stock outstanding The current market price of Walker common stock is $66 per share rights on The companys net income this year is $21 00 million A rights offering has been announced in which 620,000 new shares will be sold at $60 50 per share The subscription price plus five rights is needed to buy one of the new shares a What are the earnings per share and price earnings ratio before the new shares are sold via the rights offering (Do not round intermediate calculations and round your answers to 2 decimal places ) Earnings per share $ Price earnings ratio b What would the earnings per share be immediately after the rights offering What would the price earnings ratio be immediately after the rights offering (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex rights ) (Do not round intermediate calculations and round your answers to 2 decimal places ) Earnings per share $ Price earnings ratio

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 18, 2024

Walker Machine Tools has 6.2 million shares of common stock outstanding. The current market price of Walker common stock is $66 per share rights-on. The

Walker Machine Tools has 6.2 million shares of common stock outstanding. The current market price of Walker common stock is $66 per share rights-on. The companys net income this year is $21.00 million. A rights offering has been announced in which 620,000 new shares will be sold at $60.50 per share. The subscription price plus five rights is needed to buy one of the new shares.

a.	What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.)


Earnings per share	$
Price-earnings ratio

What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal places.)