Stockholders of a company may be reluctant to finance expansion through issuing more equity because their...
Stockholders of a company may be reluctant to finance expansion through issuing more equity because
| their earnings per share may decrease. |
| the price of the stock will automatically decrease. |
| dividends must be paid on a periodic basis. |
| leveraging with debt is always a better idea. |
Homework Answers
Equity stockholders of a company may be reluctant to finance expansion through issuing more equity because:-
a) Their earnings per share may decrease.
Earnings per share is:- total earnings divided by the total number of outstanding shares, thus if new shares are increases, total earnings will get further diluted.
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