Link Back to the EPS Calculation in Chapter 14 and the IMA Ethical Guidelines in Chapter 19. In 1996 Target was the third-largest retailer in the United States, with over 750 stores in 38 states. So it was big news when the company decided to stop selling cigarettes in its stores. Cigarettes often have markups of 20 to 30%. Analysts estimate that Target's decision to elim- inate this product line may have cost the company up to $64 million in lost revenues and $18 million in earnings. II Target had continued selling cigarettes and if cigarette sales had grown at the same rate as Target's other sales. Target's earnings could have been $23 million higher in 1999. Required 1. Use Target Corporation's 1999 Annual Report to determine the company's earnings per share (EPS) before extraordinary items for 1999. (Hint: Look at the basic EPS calculation in the EPS footnote to the financial statements.) Estimate what EPS would have been in 1999 it Target had continued selling cigarettes. 2. As the CFO of Target, justify to the company's stockholders how the company could make a decision that reduced earnings. How do ethical considerations enter this deci- ston Would the IMA's Ethical Guidelines help if you had been asked to make the initial recommendation to drop this product line?