M4 J&J Inc. has decided to issue new stock to raise $9,000,000 to expand its operations.J&J currently has 2.6 million common shares outstanding which sell for $29/shareand net income of $4.1 million. J&J's investment dealer will sell the stock for $27with a spread of 5%. There will be a $75,000 registration cost.A) Calculate current EPS and PE ratio.B) How many shares will have to be sold to net $4.1 million?C) Calculate new EPS and stock price immediately after the sale if the PE ratioremains constant.

Data given: Net income = $4.1 million No. of common shares outstanding = 2.6 million Fund to be…

Answered: J&J Inc. has decided to issue new stock…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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