Tyson Iron Works is about to go public. It currently hasaftertax earnings of $5,300,000, and 3,700,000 shares are owned bythe present stockholders. The new public issue will represent700,000 new shares. The new shares will be priced to the public at$20 per share with a 5 percent spread on the offering price. Therewill also be $190,000 in out-of-pocket costs to the corporation
Compute the earnings per share immediately after the stockissue. (Do not round intermediate calculations and round youranswer to 2 decimal places.)
Determine what rate of return must be earned on the net proceedsto the corporation so there will not be a dilution in earnings pershare during the year of going public. (Do not round intermediatecalculations. Enter your answer as a percent rounded to 2 decimalplaces.)
Determine what rate of return must be earned on the proceeds tothe corporation so there will be a 15 percent increase in earningsper share during the year of going public. (Do not roundintermediate calculations. Enter your answer as a percent roundedto 2 decimal places.)
