Vandenbosch Insurance Inc

question 40

Essay

Vandenbosch Insurance Inc.currently has net income of $8 million and 2 million common shares outstanding which sell for $25/share.Vandenbosch has decided to issue new stock to raise $6,000,000 to expand its operations.Vandenbosch's investment dealer will sell the stock for $22 with a spread of 8%.There will be a $100,000 registration cost.
A)Calculate current EPS and PE ratio.
B)How many shares will have to be sold to net $6 million?
C)Calculate new EPS and stock price immediately after the sale if the PE ratio remains constant.

• A)Calculate current EPS and PE ratio.
• B)How many shares will have to be sold to net $6 million?
• C)Calculate new EPS and stock price immediately after the sale if the PE ratio remains constant.