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Management Studies

Problem:

The net profit of the Ajax corporation has averaged $60,000 a year. there are 12,000 shares of common stock authorized, but only 6,000 are issued and outstanding. More capital is needed and the owners are considering selling the additional 6,000 shares at $100 a share. It is estimated that the new capital will make it possible to increase the net profit to $90,000.

Required:

Question 1) What is the net profit per share now?

Question 2) What is the expected net profit per share is 6,000 new shares are sold?

Question 3) Does it appear to be a good action to take?

Solve the problem carefully and provide step by step calculation.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91147556

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