Vansteelandt Inc

question 96

Multiple Choice

Vansteelandt Inc. has net income of $4,000,000 and 1,000,000 shares outstanding. Its common stock is currently selling for $50 per share. It needs to raise $2,000,000 in funds for a new asset. Its investment dealer plans to sell an issue of common stock to the public for $48 for a spread of 4%. How much must Vansteelandt's aftertax income increase to prevent dilution of EPS?

• A) $41,667
• B) $166,668
• C) $40,000
• D) none of the other answers are correct

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