Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of dilution in earnings per share?
A)$2.79
B)$1.38
C)$1.77
D)No dilution occurs since new money is received by Maxwell.

Question

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The Answer of Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of dilution in earnings per share?
A)$2.79
B)$1.38
C)$1.77
D)No dilution occurs since new money is received by Maxwell.