# Drury Corporation needs to raise $1,700,000. The corporation plans on selling 110,000 shares of... ## Question: Drury Corporation needs to raise$1,700,000.

The corporation plans on selling 110,000 shares of $23 par value common stock. Drury Corporation currently has 140,000 shares of stock outstanding and a net income of$1,300,000.

The $1,700,000 from the stock sale is expected to generate an additional income of$400,000 before interest and taxes.

The income tax rate is 30%.

What are the earnings per share after the sale of 110,000 shares of stock?

(Round the final answer to the nearest cent.)

## Earnings Per Share (EPS):

Earnings Per Share (EPS) is computed by dividing the net income available to common stockholders by the number of shares outstanding at the period-end.

The earnings per share after the sale of 110,000 shares of stock is $3.32. Compute the EPS as follows: Computation for EPS Additional income before interest and taxes$400,000
Less: Income Tax ($400,000 x 30%)$(120,000)
Net Income after tax $280,000 Add: Old Net Income$1,300,000
Total Income Available to common stockholders (b) $1,580,000 Total number of outstanding shares (b) (140,000 + 110,000) 250,000 EPS (a/b)$6.32