BUS 225 DAYONE LL
BUS 225 DAYONE LL
17th Edition
ISBN: 9781264116430
Author: BLOCK
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 15, Problem 3P

American Health Systems currently has 6,400,000 shares of stock outstanding and will report earnings of $ 10 million in the current year. The company is considering the issuance of 1,700,000 additional shares that will net $ 30 per share to the corporation.

a. What is the immediate dilution potential for this new stock issue?

b. Assume that American Health Systems can earn 9 percent on the proceeds of the stock issue in time to include them in the current year’s results. Calculate earnings per share. Should the new issue be undertaken based on earnings per share?

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Ends Feb 2 Discuss and explain in detail the "Purpose of Financial Analysis" as well as the two main way we use Financial Ratios to do this.
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