Orbit Ltd Has 30,000 Shares Outstanding and Earned $30,000 on Capital

question 8

Multiple Choice

Orbit Ltd. has 30,000 shares outstanding and earned $30,000 on capital invested of $90,000 last year. What is the likely impact of an investment opportunity to issue 10,000 more shares for $30,000 to earn an additional $14,000?

• A) EPS will decrease and the stock price will fall
• B) the new investment is relatively less profitable
• C) the new investment is relatively more profitable
• D) total profits will increase slightly but by not enough
• E) the new capital invested will earn less per dollar

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Definitions:

Influenza

A highly contagious viral infection that attacks the respiratory system, commonly known as the flu, characterized by fever, cough, and muscle aches.

Allergy

A hypersensitive reaction of the immune system to specific substances, known as allergens, which are harmless to most people.

Nasal Discharge

A common symptom involving fluid that flows from the nose, often due to allergies, colds, or infections.

Common Cold

A viral infection of the upper respiratory tract that is characterized by symptoms such as sneezing, sore throat, coughing, and a runny nose.