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

question 42

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 by to prevent dilution of earnings per share?

• A) $40,000
• B) $416,667
• C) $350,000
• D) $375,000

---

Definitions:

Accountability

The obligation of an individual, organization, or entity to account for its activities, accept responsibility for them, and disclose the results in a transparent manner.

Credit or Blame

The act of attributing success or failure to someone or something, often affecting perceptions of responsibility and accountability.

Top Management

Top management consists of the highest-level executives and decision-makers in an organization responsible for determining its strategy, direction, and policies.

Mechanistically or Organically

Describes organizations on a continuum from highly structured and hierarchical (mechanistic) to more flexible and adaptive (organic) structures.