Arnold's Construction Is an All-Equity Firm with 80,000 Shares of Stock

Arnold's Construction is an all-equity firm with 80,000 shares of stock outstanding.The book value per share is $23,and the market value per share is $50.The current net income is $216,000.The firm is considering a new project that will cost $2.6 million and will increase net income by $120,000.The project will be all-equity financed.The project will be financed with new equity shares.The current earnings per share is ________ and it will be ________ if the project is accepted.

A) $2.60; $2.48
B) $2.70; $2.52
C) $2.60; $2.55
D) $2.70; $2.55
E) $2.70; $2.61

Correct Answer:

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