Newdex Has Net Income of $3,000,000 (INCLUDING the Effect of Expected

question 86

Multiple Choice

Newdex has net income of $3,000,000 (INCLUDING the effect of expected underwriting costs) and 1,000,000 shares outstanding. It needs to raise $5,000,000 in funds for a new asset. Its investment banker plans to sell an issue of common stock to the public for $40, less a spread of 10%. How much must Newdex's after-tax income increase to prevent dilution of EPS?

• A)$40,000
• B)$416,667
• C)$350,000
• D)None of these options

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Definitions:

Equal Pay

The principle that individuals should receive the same remuneration for work of equal value, regardless of gender or other characteristics.

Group-Based Incentive Plan

A compensation strategy where rewards are based on the collective performance of a group, encouraging teamwork and shared goals.

Team-Based Incentive Plan

A reward system where workers are compensated based on the performance and achievements of their group or team.

Point System Job Evaluation

A quantitative method of determining the value of a job in relation to other jobs within an organization by scoring it on various factors.