15-2 In problem 1, if the 1 million add itional shares can only be issued at $32 per share and the company can earn 5 percent on the proceeds, should the new issue be undertaken based on earnings per share? Solution Louisiana Timber Company( Continued) Net income=$9,000000+.05($1,000,000x$32) $9.000,000+.05($32,00000 =$9,000,000+$1600000 $10,600,000 Earnings per share after additional income EPS=$10,600,000/$6,000,000=$1.77 No, E. P.S. would decline by 3 cents from $1.80 to $1.77 CopyrightC 2005 by The McGray-Hill Companies, Inc. -528Copyright © 2005 by The McGraw-Hill Companies, Inc. S-528 15-2. In problem 1, if the 1 million additional shares can only be issued at $32 per share and the company can earn 5 percent on the proceeds, should the new issue be undertaken based on earnings per share? Solution: Louisiana Timber Company (Continued) Net income = $ 9,000,000 + .05 ($1,000,000 x $32) = $ 9,000,000 + .05 ($32,000,000) = $ 9,000,000 + $1,600,000 = $10,600,000 Earnings per share after additional income EPS = $10,600,000/$6,000,000 = $1.77 No, E.P.S. would decline by 3 cents from $1.80 to $1.77