Drury Corporation needs to raise $2,000,000. The corporation plans on selling 11

Question

Drury Corporation needs to raise $2,000,000. The corporation plans on selling 110,000 shares of $19 par value common stock. Drury 80,000 shares of stock outstanding and net income of $1,400,000. The $2,000,000 from the stock sale is expected to generate additional income of $700,000 before interest and taxes. The income tax rate is 2 %. What are the earnings per share after the sale of 1 10,000 shares of stock? Round your final answer to the nearest cent.) O A. $9.31. O B. $6.76. O C. $7.24 O D. $8.83

Explanation / Answer

Answer

c ) 7.24

earning per share = net income / weighted average common shares outstanding

= 1400000 / 180000

= 7.78 per share

the nearest to 7.78 = 7.24

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