Rhodes Trucking is considering investing in a new $3.7 million project that will increase net income...
Rhodes Trucking is considering investing in a new $3.7 million project that will increase net income by 2.7 percent. This project will be completely funded by issuing new equity shares. Currently, the firm has 647,400 shares of stock outstanding with a market price of $41 per share. The current earnings per share of $3.02. What will the earnings per share be if the project is implemented?
Homework Answers
Current Earnings = 3.02 per share * 647400 shares
= 1,955,148
Revised Earnings. = 1,955,148 * (1+0.027) = $ 2,007,936.996
Existing no of share = 647400 shares
New no of shares issued = 3,700,000 / 41 = 90243.90 OR 90244
Revised no of shares = 647400 + 90244
= 737,644 shares
Revised EPS = Revised Earnings / Revised no of shares
= 2,007,936.996 / 737,644
= $ 2.72 / share
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