Problemnewdex has net income of 2500000 and 1000000 shares, Ask an Expert

Accounting

Problem:

Newdex has net income of $2,500,000 and 1,000,000 shares outstanding. It needs to raise $3,610,000 in funds for a new asset. Its investment banker plans to sell an issue of common stock to the public for $40 per share, less a spread of 5%.

Required:

Question: How much must Newdex's after-tax income increase to prevent dilution of EPS?

A) $40,000

B) $237,500

C) $250,000

D) None of these

Note: Explain all calculation and formulas.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169276

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