Multiple Choice
Mountain Homes is considering an expansion costing $5.7 million that will increase net income by $452,000. The company currently has 2.3 million shares outstanding and no debt. The stock sells for $38 per share and the book value per share is $27. The current net income is $1.02 million. Assume the firm issues new equity to fund this expansion while maintaining a constant price-earnings ratio. What will be the EPS after the new equity issue?
A) $.60
B) $.52
C) $.44
D) $.67
E) $.55
Correct Answer:
Verified
Correct Answer:
Verified
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