Jordan Broadcasting Company is going public at $47 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $31 million in earnings divided over 8 million shares. The public offering will be for 4 million shares; 2 million will be new corporate shares and 2 million will be shares currently owned by the founding stockholders. a. What is the immediate dilution based on the new corporate shares that are being offered? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution b. If the stock has a P/E of 20 immediately after the offering, what will the stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) Stock price per share c. Should the founding stockholders be pleased with the $47 they received for their shares? O Yes O No

Jordan Broadcasting Company is going public at $47 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $31 million in earnings divided over 8 million shares. The public offering will be for 4 million shares; 2 million will be new corporate shares and 2 million will be shares currently owned by the founding stockholders. a. What is the immediate dilution based on the new corporate shares that are being offered? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution b. If the stock has a P/E of 20 immediately after the offering, what will the stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) Stock price per share c. Should the founding stockholders be pleased with the $47 they received for their shares? O Yes O No

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter1: Role Of Accounting In Society

Section: Chapter Questions

Problem 15Q: According to a company press release, on January 5, 2012, Hansen Natural Corporation changed its...

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