American Health Systems currently has 7,200,000 shares of stock outstanding and will report earnings of $12 million in the current year. The company is considering the issuance of 1,300,000 additional shares that will net $40 per share to the corporation. a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution b-1. Assume that American Health Systems can earn 15 percent on the proceeds of the stock issue in time to include them in the current year's results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share per share b-2. Should the new issue be undertaken based on earnings per share? O Yes O No

American Health Systems currently has 7,200,000 shares of stock outstanding and will report earnings of $12 million in the current year. The company is considering the issuance of 1,300,000 additional shares that will net $40 per share to the corporation. a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution b-1. Assume that American Health Systems can earn 15 percent on the proceeds of the stock issue in time to include them in the current year's results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share per share b-2. Should the new issue be undertaken based on earnings per share? O Yes O No

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 8M

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