Answer:
$416,667
Explanation:
Current EPS = $3,000,000 / 1,000,000
Current EPS = $3
Net Proceeds per share = $40 * 90%
Net Proceeds per share = $36
New Number of Shares = $5,000,000 / $36
New Number of Shares = 138888.88
Total Number of Shares Outstanding after the new issue = 1138888.88 shares
Diluted EPS = $3,000,000 / 1138888.88
Diluted EPS = $2.634
Amount of Dilution in EPS = $3 - $2.634
Amount of Dilution in EPS = $0.3658
Net Income must increase by 1138888.88 * $0.3658 = $416,667. So, Newdex's after-tax income must increase to $416,667 to prevent dilution of earnings per share.
