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

question 22

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% on offer price.How much must Bindex's after-tax income increase to prevent dilution of EPS?

• A) $40,000
• B) $237,500
• C) $250,000
• D) $361,000

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Definitions:

Habituate Rapidly

The process of quickly becoming accustomed or desensitized to a stimulus through repeated exposure.

Nonverbal

Communication or interaction that occurs without the use of words, including gestures, body language, and facial expressions.

Perceptually Differentiated

The capability to distinguish between different stimuli or pieces of information based on sensory input.

Distractible

A characteristic of an individual who is easily pulled away from focusing on something by external stimuli or thoughts.