15-8. Womenpower Temporaries, Inc, has earnings of $4.5 million with 1.8 million shares outstand ing before a public distribution. Four hundred thousand shares will be included in the sale, of which 250,000 are new corporate shares, and 150,000 are shares currently owned by Julie Lipner, the founder and CEo. The 150,000 shares that Julie is selling are referred to as a secondary offering and all proceeds will go to her The net price from the offering will be $22.50 and the corporate proceeds are expected to produce $2 million in corporate earnings a. What were the corporation s earnings per share before the offering? b. What are the corporation s earnings per share expected to be after the offering Solution: omenpower Temporaries, Inc. a. Earnings per share before the stock issue $4,500.000/$1800.000=$250 b. Earnings per share after the stock issue Total Earnings Before offering $4,500.000 Incremental earnings 2000000 Earnings after offering $6.500.000 Corporate shares outstanding Before offering 1,800,000 Incremental shares 250000* Shares after offering 2.050000 s The 150,000 secondary shares are not included as new corporate nares arnings =$6500,000/$2,050,000=$3.17 per share CopyrightC 2005 by The McGray-Hill Companies, Inc. S-534Copyright © 2005 by The McGraw-Hill Companies, Inc. S-534 15-8. Womenpower Temporaries, Inc., has earnings of $4.5 million with 1.8 million shares outstanding before a public distribution. Four hundred thousand shares will be included in the sale, of which 250,000 are new corporate shares, and 150,000 are shares currently owned by Julie Lipner, the founder and CEO. The 150,000 shares that Julie is selling are referred to as a secondary offering and all proceeds will go to her. The net price from the offering will be $22.50 and the corporate proceeds are expected to produce $2 million in corporate earnings. a. What were the corporation's earnings per share before the offering? b. What are the corporation's earnings per share expected to be after the offering? Solution: Womenpower Temporaries, Inc. a. Earnings per share before the stock issue $4,500,000/$1,800,000 = $2.50 b. Earnings per share after the stock issue Total Earnings Before offering $4,500,000 Incremental Earnings 2,000,000 Earnings after offering $6,500,000 Corporate shares outstanding Before offering 1,800,000 Incremental Shares 250,000* Shares after offering 2,050,000 * The 150,000 secondary shares are not included as new corporate shares. $6,500,000/ $2,050,000 $3.17 per share Earnings = =