Newdex has net income of $2,500,000 and 1,000,000 shares outstanding. It needs to raise $3,610,000 in funds for a new asset

| March 14, 2016

1. Newdex has net income of $2,500,000 and 1,000,000 shares outstanding. It needs to raise $3,610,000 in funds for a new asset. Its investment banker plans to sell an issue of common stock to the public for $40 per share, less a spread of 5%. How much must Newdex’s after-tax income increase to prevent dilution of EPS?

Question 11 options:

A) $40,000

B) $237,500

C) $250,000

D) none of these

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