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. It's investment banker plans to sell an issue of common stock to the public for $40, less spread of 10%. How much must Newdex's after-tax income increase by to prevent dilution of earnings per share?
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. It's investment banker plans to sell an issue of common stock to the public for $40, less spread of 10%. How much must Newdex's after-tax income increase by to prevent dilution of earnings per share?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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. It's investment banker plans to sell an issue of common stock to the public for $40, less spread of 10%. How much must Newdex's after-tax income increase by to prevent dilution of earnings per share?
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