In problem 3, if the 2 million add itional shares can be issued at $27 per share and the company can earn 10.8 percent on the proceeds, should the new issue be undertaken based on earnings per share? Solution Micromanagement, Inc( Continued) Net income=$20,000,000+.108(2000,000X$27) $2000000+.108($54,000,000 =$20,0000+$5,832,000 $25,832,000 Earnings per share after additional income EPS=$25,832,000/10,00000 $258 Yes, the eps of $2.58 is still higher than $2.50 CopyrightC 2005 by The McGray-Hill Companies, Inc. -530Copyright © 2005 by The McGraw-Hill Companies, Inc. S-530 15-4. In problem 3, if the 2 million additional shares can be issued at $27 per share and the company can earn 10.8 percent on the proceeds, should the new issue be undertaken based on earnings per share? Solution: Micromanagement, Inc. (Continued) Net income = $20,000,000 + .108 (2,000,000 x $27) = $20,000,000 + .108 ($54,000,000) = $20,000,000 + $5,832,000 = $25,832,000 Earnings per share after additional income EPS = $25,832,000/10,000,000 = $2.58 Yes, the EPS of $2.58 is still higher than $2.50