Bindex Has Net Income of $2,500,000 and 1,000,000 Shares Outstanding

question 69

Multiple Choice

Bindex has net income of $2,500,000 and 1,000,000 shares outstanding. Its common stock is currently selling for $40 per share. It needs to raise $3,610,000 in funds for a new asset. Its investment dealer plans to sell an issue of common stock to the public for $38 for a spread of 5%. How much must Bindex's aftertax income increase to prevent dilution of EPS?

• A) $40,000
• B) $237,500
• C) $250,000
• D) none of the other answers are correct

---

Definitions:

Deceptive Trade Practices

Unfair business practices that mislead or deceive consumers, usually regulated by laws to protect consumer rights.

Multiple Product Orders

The process or action of purchasing more than one item or service at a time from the same provider.

Corrective Advertising

Advertising designed to correct previous misleading or deceptive advertisements.

Federal Trade Commission Act

A United States federal law established in 1914 to promote consumer protection and to eradicate anticompetitive business practices.