Question

2) The company wishes to raise $100 million by issuing stock. The current market price is $15 per share, however, if issued the price will drop to $12.50 per share. How many shares will need to be issued if under writing is 5% per share? If there are currently 600,000 shares outstanding, with an EPS of .25 cents per share, how will this affect the EPS if net income remains unchanged? If the company has a standard practice of paying a dividend of .10 cents per share, once a year, what will be the change in dividends paid? Assuming an effective tax rate of 30% what would be the tax savings?