Assume that current sales are $30 million, and are expected to grow by 12% in year...

Assume that current sales are $30 million, and are expected to grow by 12% in year 1 and 2. The after-tax profit margin is projected at 8% in year 1, and 9.2% in year 2. The number of shares outstanding is anticipated to be 450,000 for year 1, and 500,000 for year 2. Calculate the projected earnings per share for the next two years.

Expert Solution

CALCULATION OF THE EARNING PER SHARES OF YEAR 1 & YEAR 2

PARTICULARS	YEAR 1	YEAR 2
Projected Sales	$ 3,36,00,000	$ 3,76,32,000
	($30,000,000 X 1.12)	($33,600,000 X 1.12)

Projected After Tax Net Profit Margin =	$ 26,88,000	$ 34,62,144
	= $ 33,600,000 X 8%)	= $ 37,632,000 X 9.2%)

Divide By	"/" By	"/" By

Projected Number of Shares Outstanding	450000	500000

Projected Earning Per shares	$ 5.97	$ 6.92


Answer =	YEAR 1	YEAR 2
Projected Earning Per shares	$ 5.97	$ 6.92

jeff jeffy answered 2 years ago

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