The Hamilton Corporation Company has 4 million shares of stock outstanding and will report earnings of $6,000,000
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The Hamilton Corporation Company has 4 million shares of stock outstanding and will report earnings of $6,000,000 in the current year. The company is considering the issuance of 1 million additional shares that will net $30 per share to the corporation.
a. What is the immediate dilution potential for this new stock issue?
b. If the stock has a P/E ratio of 23 immediately after the offering, what will the stock price be?
c. Should the founding stockholders be pleased with the $40 they receive for their shares?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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a Computation of the dilution based on the new corporate shares tha...View the full answer
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Related Book For 
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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