Origami Company Is Considering a New Project and Needs to Raise

question 56

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. They would have to issue an additional 10,000 shares of common stock to finance the project with equity capital.
If Origami decides to implement the project using equity 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) $3.00

Identify strategies for interpreting and utilizing information effectively.

Recognize the steps and ethics involved in the research process.

Determine the importance of having a clear research goal before starting the information-seeking process.

Evaluate the credibility and relevance of sources for research purposes.

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Definitions:

Upgrading Calculators

The process of replacing or enhancing calculators to include more advanced features or capabilities, often to improve efficiency or meet new requirements.

Present Condition

The current state or situation of an object, individual, or scenario, often assessed to make decisions or predictions.

Financial Advantage

Refers to the benefit gained in financial terms, which could stem from various sources such as economies of scale, portfolio diversification, or market position.

Production

The process of creating goods or services using labor, materials, and machinery.