Origami Company Is Considering a New Project and Needs to Raise

question 109

Multiple Choice

Origami Company is considering a new project and needs to raise $800,000 of capital. Their after-tax net income would be $75,000 if they do not implement the new project. If the new project is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's income tax rate is 40%. If they use debt financing, the interest will be at 5%.
- Origami has 25,000 shares of common stock outstanding and no preferred stock.
If Origami decides to implement the project using debt financing, what will be the earnings per share amount? (Please round to the nearest cent.)

• A) $3.24
• B) $4.14
• C) $3.40
• D) $4.20

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Definitions:

Simple Forms

Refers to basic geometrical shapes or structures in art and design that are devoid of complex details or decorations.

Ukiyo-E

Japanese, "pictures of the floating world." During the Edo period, woodcut prints depicting brothels, popular entertainment, and beautiful women.

Urban Counterculture

A subculture that emerges in urban areas, often defined by its opposition to mainstream cultural norms.

Edo Period

A period in Japan from 1603 to 1868 characterized by the rule of the Tokugawa shogunate, notable for its cultural development, social order, and isolationist foreign policy.