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

question 41

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 be to prevent dilution of earnings per share?

• A) $3,040,000
• B) $3,416,667
• C) $3,350,000
• D) $3,375,000

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Definitions:

Zero Defects

A quality management philosophy that aims for the minimization and elimination of defects in manufacturing processes and products.

Deming

Refers to W. Edwards Deming, an American engineer and statistician known for his work in quality management and his influential ideas in improving business processes.

Numerical Quotas

Specific numeric limits set for production, sales, or other business metrics that need to be achieved within a given timeframe.