The Hamilton Corporation Company has 4 million shares of stock outstanding and will report earnings of $6,910,000

Question:

The Hamilton Corporation Company has 4 million shares of stock outstanding and will report earnings of $6,910,000 in the current year. The company is considering the issuance of 1 million additional shares, which can only be issued at $30 per share.

a. Assume the Hamilton Corporation Company can earn 7.00 percent on the proceeds. Calculate the earnings per share.

b. Should the new issue be undertaken based on earnings per share?

Corporation
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...