Finance

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?

  1. 👍
  2. 👎
  3. 👁
  1. EPS=NI/#shares Outstanding
    2,500,000/1,000,000=2.5 ratio
    1,000,000(1.05)+(3,610,000/40)=
    1050000+90250=1140250 shares
    2.5=NI/1140250
    NI=2850625
    -2500000
    Increase in NI=350625

    1. 👍
    2. 👎
  2. Miles Metals recently reported $11,500 of sales, $4,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6% interest rate, and its federal-plus-state income tax rate was 38%. What was the firm's net income after taxes? The company uses the same depreciation for tax and stockholder reporting.

    Select the correct answer.

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Math/Piecewise functions

    Write a piecewise definition for the tax due T(x) on an income of x dollars When x

  2. Accounting

    Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels’ earnings per share for 2011 is A.$4.00

  3. Accounting

    O' Hara Company began operations on December 1, 2011. Presented below is selected information related to O' Hara Company at December 31, 2011. Office Equipment ₤ 40,000; Utilities Expense ₤ 6,000; Cash 14,000; Accounts

  4. accounting

    Ziegler Corporation purchased 25,000 shares of common stock of the Sherman Corporation for $40 per share on January 2, 2010. Sherman Corporation had 100,000 shares of common stock outstanding during 20 I3, paid cash dividends of

  1. Intermediate Accounting

    On January 4, 2002, Wynn, Inc., bought 15% of Parr Corporation’s common stock for $60,000. Wynn appropriately accounts for this investment by the cost method. The following data concerning Parr are available for the years ended

  2. accounting

    Internal Insights Inc., a developer of radiology equipment, has stock outstanding as follows: 70,000 shares of cumulative preferred 2% stock, $60 par, and 100,000 shares of $10 par common. During its first four years of

  3. accounting

    Fill in the blanks in the following separate income statements a through e. Identify any negative amount by putting it in parentheses. a b c d e Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000

  4. accounting

    The condensed income statement for a business for the past year is as follows: ​ Product: white, black Sales white: $ 750,000 black: $550,000 Less variable costs white: 400,000 black: 380,000 Contribution margin white: $350,000

  1. financial accounting

    (5) Chapter 13 Problem The Torre Company has the following balances in stockholders equity on December 31st. Common Stock - $5.00 par, 60,000 issued $300,000 Additional paid in capital - common 600,000 Preferred stock - $100 par,

  2. finance (firm's net income)

    If a firm has a break-even point of 20,000 units and the contribution margin on the sirm's single product is $3.00 per unit and fixed costs are $60,000, what will the firm's net income be at sales of 30,000 units? o.k. the break

  3. Accounting (Grade 12)

    GANTNER CORPORATION Comparative Balance Sheet December 31 2002 2001 Assets Cash $ 4,000 $ 6,000 Accounts receivable (net) 12,000 10,000 Inventory 14,000 20,000 Land 28,000 8,000 Machinery 62,000 60,000 Accumulated amortization

  4. statistics

    The data set represents the income levels of the members of a country club. Estimate the probability that a randomly selected member earns at least $98,000. 112,000 126,000 90,000 133,000 94,000 112,000 98,000 82,000 147,000

You can view more similar questions or ask a new question.