Butterfield's is an all-equity firm with 165,000 shares of stock outstanding.The book value per share is $17 and the market value per share is $63.The current net income is $521,000.The firm is considering a new project that will cost $3.6 million and increase net income by $168,000.The current earnings per share are ____ and they will be ____ if the project is accepted.

Question

Quizplus · Accepted Answer

Current EPS = $521,000/165,000 = $3.16New shares outstanding = 165,000 + $3,600,000/$63 = 222,143New EPS = ($521,000 + 168,000)/222,143 = $3.10

Butterfield's Is an All-Equity Firm with 165,000 Shares of Stock