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    saraha82's Avatar
    saraha82 Posts: 1, Reputation: 1
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    #1

    Feb 18, 2007, 01:58 PM
    Net Proceeds with a new stock issue
    I am asked to find the net proceeds for a company. It has after tax earnings of 7.5 million and currently has 2.5 million shares owned by present stockholders. The plan is to issue 600,000 shares to the public at $20 per share with a 5% spread on the offering price. There is also a $200,000 out of pocket cost to the corporation.

    I then have to find earnings per share before and after the company went public.

    Then I need to find the rate of return on the net proceeds that won't dilute the earnings per share when the company went public.

    Finally, I have to determine what the rate of return has to be to get a 5% increase in earnings per share during the year of going public.

    Can anyone help?

    Sarah
    acca_123's Avatar
    acca_123 Posts: 4, Reputation: 1
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    #2

    Feb 18, 2007, 04:44 PM
    In order to calculate EPS the formula is

    EPS = Net income available to common shareholders/ Weighted average No. of common share holerders outstanding.

    Hope this helps.

    acca_123
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