Walker Machine Tools has 7 million shares of common stock outstanding. The current market price of Walker common stock is $82 per share rights-on. The company's net income this year is $25.00 million. A rights offering has been announced in which 700,000 new shares will be sold at S76.50 per share. The subscription price plus seven rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round Intermedlate calculatlons and round your answers to 2 decimal places.) b. What would the earnings per share be immediately after the rights offering? What would the price- earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round Intermedlate calculations and round your answers to 2 decimal places.)

Walker Machine Tools has 7 million shares of common stock outstanding. The current market price of Walker common stock is $82 per share rights-on. The company's net income this year is $25.00 million. A rights offering has been announced in which 700,000 new shares will be sold at S76.50 per share. The subscription price plus seven rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round Intermedlate calculatlons and round your answers to 2 decimal places.) b. What would the earnings per share be immediately after the rights offering? What would the price- earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round Intermedlate calculations and round your answers to 2 decimal places.)

Name: Walker Machine Tools has 7 million shares of common stock outstanding
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Description: Walker Machine Tools has 7 million shares of common stock outstanding. The current market price ofWalker common stock is $82 per share rights-on. The company's net income this year is $25.00 million. Arights offering has been announced in which 700,

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Walker Machine Tools has 7 million shares of common stock outstanding. The current market price of
Walker common stock is $82 per share rights-on. The company's net income this year is $25.00 million. A
rights offering has been announced in which 700,000 new shares will be sold at S76.50 per share. The
subscription price plus seven rights is needed to buy one of the new shares.
a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights
offering? (Do not round Intermedlate calculatlons and round your answers to 2 declmal places.)
b. What would the earnings per share be immediately after the rights offering? What would the price-
earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of
the stock, except for the change when the stock begins trading ex-rights.) (Do not round Intermedlate
calculatlons and round your answers to 2 decimal places.)

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