Solved: Issue based on eps, If the 500,000 shares can only be issues at $31 per share and the, Accounting Basics

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Issue based on eps

Problem:

No. of Outstanding share before issue = 4,000,000
No. of Outstanding share after issue 4,000,000 + 500,000 = 4,500,000 (500k shares issued @ 31 per share)

EPS before issue = $1.75 ; EPS after issue = $1.56

If the 500,000 shares can only be issues at $31 per share and the company can earn 6% on the net proceeds, should they still proceed with this issue based upon EPS?

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Accounting Basics: Issue based on eps

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