Walker Machine Tools has 6.5 million shares of common stock outstanding. The current market price of Walker common stock is $72 per share rights-on. The company's net income this year is $22.50 million. A rights offering has been announced in which 650,000 new shares will be sold at $66.50 per share. The subscription price plus seven 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?

Earnings per share 71.31 X Price-earnings ratio 22.64Earnings per share 3.46 Price-earnings ratio 20.81