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A company earns $600,000 after taxes in 2006 w/ 300,000 shares of outstanding stock. On 1/1/07 they issued 40,000 new shares, earnings increased by 25% after taxes.
Compute earnings per share for the year 2007 600,000/300,00 = $2 per share
Compute earnings per share for the year 2007 150,000/40,000 = $3.75 per share