The Anton Corporation, a manufacturer of radar control equipment, is planning to sell its shares to the general public for the first time. The firm’s investment banker is working with the Anton Corporation in determining a number of items. Information on the Anton Corporation follows:,Anton Corporation,Income statement,For the year 200x,Sales (all on credit) $22,428,000,Costs of goods sold 16,228,000,Gross profit 6,200,000,Selling and administrative expenses 2,659,400,Operating profit 3,540,600,Interest expense 370,600,Net income before taxes 3,170,000,Taxes 1,442,000,Net income $ 1,728,000,,,,,,,,,,,,Balance Sheet,As of December 31, 200x,Assets,Cash $ 150,000,Marketable securities 100,000,Accounts receivable 2,000,000,Inventory 3,800,000, Total current assets 6,050,000,Net plant and equipment 6,750,000,Total assets 12,800,000,Liabilities and stockholders’ equity,Accounts payable $1,000,000,Notes payable 1,200,000, Total current liabilities 2,200,000,Long term liabilities 2,380,000, Total liabilities 4,580,000,Common stock (1,200,000 shares at $1 par) 1,200,000,Capital paid in excess of par 2,800,000,Retained earnings 4,220,000, Total stockholders’ equity 8,220,000,Total liabilities and stockholders’ equity 12,800,000,,,,The new public offering will be at 10 times the earnings per share,a. Assume that 500,000 new corporate shares will be issued to the general public. What will earnings per share be immediately after the public offering? (Round to two places to the right of the decimal point.) Based on the price earnings ratio of 10, what will the initial price of the stock be? Use earnings per share after the distribution in the calculation.,b. Assuming an underwriting spread of 7 percent and out of pocket cost of $150,000, what will net proceeds to the corporation be?,c. What return must the corporation earn on the net proceeds to equal the earnings per share before the offering? How does this compare with current return on the total assets on the balance sheet?,d. Now assume that, of the initial 500,000 share distribution, 250,000 shares belong to current stockholders and 250,000 are new corporate shares, and these will be added to the 1,200,000 corporate shares currently outstanding. What will earnings per share be immediately after public offering? What will the initial market price of the stock be? Assume a price earnings ratio of 10 and use earnings per share after the distribution in the calculation,e. Assuming an underwriting spread of 7 percent and out of pocket costs of $150,000 what will net proceeds to the corporate be?,f. What return must the corporation now earn on the net proceeds to equal earnings per share before the offering? How does this compare with current return on the total assets on the balance sheet? ,,,
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