Use the Information for the Question(s)below

question 22

Multiple Choice

Use the information for the question(s) below.
Electronic Gaming Incorporated (EGI) is a firm with no debt and its 20 million shares are currently trading for $16 per share.Based on the prospects for EGI's new handheld video game,management feels the true value of the firm is $20 per share.Management believes that the share price will reflect this higher value after the video game is released next fall.EGI has already announced plans to raise $100 million from investors to build a new factory.
-Assume that EGI decides to wait until after the release of the new video game before they raise the $100 million through the issuance of new shares.The number of new shares that EGI will issue is closest to:

• A)1.6 million.
• B)5.0 million.
• C)10 million.
• D)6.25 million.

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Definitions:

Double Pay

Double pay refers to the practice of paying an employee twice their normal wage rate, typically for working on holidays, overtime, or under special conditions.

Net Pay

The amount of money that an employee actually receives after all deductions, such as taxes and retirement contributions, have been subtracted from their gross pay.

Gross Pay

The total amount of salary or wages earned by an employee before any deductions are made for taxes and other withholdings.

Take-Home Pay

The amount of income left after deductions like taxes and social security contributions are subtracted from the gross salary.