The Anton Corporation, a manufacturer of radar control equipment, is planning to sell its shares to the general public for the first time. The firm's investment dealer is working with the Anton Corporation in determining a number of items. Information on the Anton Corporation follows:

ANTON CORPORATION
Income Statement
For the year ending Dec. 31, 2014

Sales (all on credit) ............................................................. $22,428,000
Cost of goods sold ............................................................... 16,228,000
Gross profit. ............................................................................... 6,200,000
Selling and administrative expenses ............................... 2,659,400
Operating profit. ..................................................................... 3,540,600
Interest expense ......................................................................... 370,600
Net income before tax ......................................................... 3,170,000
Taxes ........................................................................................... 1,442,000
Net income ........................................................................... $ 1,728,000

Balance Sheet
As of December 31, 2014

Assets
Cash .................................................................................................. $ 150,000
Marketable securities ..................................................................... 100,000
Accounts receivable ..................................................................... 2,000,000
Inventory............................................................................................ 3,800,000
Total current assets ...................................................................... 6,050,000
Net plant and equipment .......................................................... 6,750,000
Total assets ................................................................................ $12,800,000

Liabilities and Shareholders' Equity
Accounts payable ..................................................................... $ 1,000,000
Notes payable ............................................................................... 1,200,000
Total current liabilities ............................................................... 2,200,000
Long-term liabilities .................................................................... 2,380,000
Total liabilities ............................................................................... 4,580,000

Shareholders' equity
Common stock (1 ,200,000 shares) ....................................... 4,000,000
Retained earnings ........................................................................ 4,220,000
Total shareholders' equity ........................................................ 8,220,000
Total liabilities and shareholders' equity ..................... $12,800,000

a. Assume that 500,000 new corporate shares will be issued to the general public. What will EPS immediately after public offering be? (Round to two places to the right of the decimal point.) Based on the P /E ratio of 10, what will the initial price of the stock be? Use EPS after the distribution in the calculation.

b. Assuming an underwriting spread of 7 percent and out-of-pocket costs of $150,000, what will be the net proceeds to the corporation?

c. What return must the corporation earn on the net proceeds to equal the EPS before the offering? How does this compare with current return on the total assets on the balance sheet?

d. Now assume that, of the initial500,000 share distribution, 250,000 shares belong to current shareholders and 250,000 are new corporate shares, and these will be added to the 1.2 million corporate shares currently outstanding. What will EPS immediately after the public offering be? What will the initial market price of the stock be? Assume a P /E ratio of 10 and use EPS after the distribution in the calculation.

e. Assuming an underwriting spread of 7 percent and out-of-pocket costs of $150,000, what will be the net proceeds to the corporation?

f. What return must the corporation now earn on the net proceeds to equal EPS before the offering? How does this compare with current return on the total assets on the balance sheet?