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

question 76

Multiple Choice

Newdex has net income of $3,000,000 (INCLUDING the effect of expected out-of-pocket 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

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Definitions:

Community Spirit

A sense of unity, belonging, and mutual support shared among members of a community.

Ecotourism

Foreign travel with the goal of minimizing the environmental consequences of tourism as well as its possible negative effects on local cultures and economies, typically involving people from highly industrialized nations traveling to less developed countries.

Green Consumption

The practice of purchasing products and services that are environmentally friendly and have minimal impact on the earth's resources.

Environmental Consequences

The impacts or effects of human activities on the natural environment, including pollution, habitat destruction, and climate change.