Drury Corporation wants to raise $2,000,000.The corporation plans on selling 100,000 shares of $20 par value common stock.Drury Corporation currently has 150,000 shares of stock outstanding and net income of $1,500,000.The $2,000,000 from the stock sale is expected to generate additional income of $500,000 before interest and taxes.The income tax rate is 30%.What are the earnings per share after the sale of 100,000 shares of stock?

Question

Quizplus · Accepted Answer

The correct answer is A.The earnings per share after the sale of 100,000 shares of stock is $7.40. This is calculated by taking the net income of $1,500,000, adding the additional income of $500,000, and then dividing by the total number of shares outstanding, which is 250,000.

Drury Corporation Wants to Raise $2,000,000