CalculatorScratch PadBeaver Co has 100 million equity shares in issue and has just reported a profit, after tax, of $55m.A new issue of 50 million equity shares at an issue price of $1.50 is being considered. All proceeds would be used to redeem a bank loan with an annual cost of 8%.Beaver Co pays corporation tax at a rate of 20%.Assume that operating profit (profit before interest and tax) remains constant.If the equity issue goes ahead and the bank loan is redeemed, what will be the new earnings per share figure?$0.367$0.388$0.399$0.598Time Remaining 02:36:174 of 34Close All P Elag for Review

Given in the question: Already shares issued = 100,000,000 shares Net Profit after tax = $55,000,000…

Answered: aling profit (profit before interest…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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aling profit (profit before interest and tax) remains constant If the equity issue goes ahead and the bank loan is redeemed, what will be the new earnings per share figure? $0.367 $0.388