Question

Drury corporation needs to raise $ 2 comma 300 comma 000. the corporation plans on selling 100 comma 000 shares of $ 23 par value common stock. drury corporation currently has 160 comma 000 shares of stock outstanding and net income of $ 1 comma 800 comma 000. the $ 2 comma 300 comma 000 from the stock sale is expected to generate additional income of $ 400 comma 000 before interest and taxes. the income tax rate is 30​%. what are the earnings per share after the sale of 100 comma 000 shares of​ stock? (round your final answer to the nearest​ cent.)

Answer 1

Net Income before Sale of Shares........................................................$1800000

Additional Income due to sale of shares.............................................$400000

Total Net Income........................................................................................$2200000

Income Tax@30%.........................................................................................($660000)

Net Income After Tax..................................................................................1540000

Total No of Shares.........................................................................................260000

Earning Per Share(Net Income After Tax/No of Shares)......................$5.92