American Health Systems currently has 6,200,000 shares of stock outstanding and will report earnings of$22 million in the current year. The company is considering the issuance of 1,900,000 additional shares,which can only be issued at $16 per share.a. Assume that American Health Systems can earn 9 percent on the proceeds. Calculate earnings pershare.Note: Do not round intermediate calculations and round your answer to 2 decimal places.Earnings per shareb. Should the new issue be undertaken based on earnings per share?YesO No

Earnings per share (EPS) refers to the earnings of the company per outstanding share. It is measured…

Answered: American Health Systems currently has…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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American Health Systems has 5,600,000 shares of stock outstanding and will report earnings of $17 million in the current year. The company is considering the issuance of 1,300,000 additional shares, which can only be issued at $21 per share. a. Assume that American Health Systems can earn 4 percent on the proceeds. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. Should the new issue be undertaken based on earnings per share? O Yes O No 10 B Next >
The Hamilton Corporation has 4 million shares of stock outstanding and will report earnings of $6,360,000 in the current year. The company is considering the issuance of 2 million additional shares that can only be issued at $38 per share. a. Assume the Hamilton Corporation can earn 7.00 percent on the proceeds. Calculate the earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. Should the new issue be undertaken based on earnings per share? O Yes O No Prev 1 of 10 Next >
Some recent financlal statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Llabilitles and Owners' Equlty Current assets Current liabilitles Cash $ 3,271 $ 3,457 Accounts payable $ 2,138 $ 2,570 5,811 Notes payable Other Accounts recelvable 4,782 12,418 1,735 2,086 Inventory 13,812 87 104 Total $ 20,471 $23.080 Total $ 3,960 $ 4760 $ 13,700 $16,460 Long-term debt Owners' equity Common stock 36,500 and pald-in surplus $36.500 S Accumulated retalned 38,893 Fixed assets 15,639 earnings Net plant and 75,393 $49,328 $73,533 Total $ 52,139 $ equipment Total llabilitles and owners' Total assets $69,799 $ 96,613 $ 69,799 $96,613 equity SMOLIRA GOLF, INC. 2019 Income Statement 186,770 Sales 125,903 Cost of goods sold Depreclation 5,363 EBIT $55,504 1,460 Interest pald Taxable Income $ 54,044 Таxes 18,915 Net Income $ 35,129 $ 11,875 23,254 Dividends Retalned earnings
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Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $2.50 per share, and the current price of its common stock is $50 per share. The expected growth rate is 8 percent. Compute the cost of retained earnings (Ke). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. If a $3 flotation cost is involved, compute the cost of new common stock (Kn). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.
Myers Drugs Inc. has 2.5 million shares of stock outstanding. Earnings after taxes are $6 million. Myers also has warrants outstanding that allow the holder to buy 100,000 shares of stock at $10 per share. The stock is currently selling for $50 per share. a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Basic earnings per share b. Compute diluted earnings per share considering the possible impact of the warrants. Assume the cash proceeds are used to repuchase shares. (Do not round intermediate calculations and round your answer to 2 decimal places.) Use the following formula: Earnings after taxes Shares outstanding + Assumed net increase in shares from the warrants Diluted earnings per share
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