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Nezavi [6.7K]
3 years ago
7

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 be to prevent dilution of earnings per share
Business
1 answer:
kkurt [141]3 years ago
6 0

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.

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kati45 [8]

Answer:

F(t)=f(t)+g(t) represents the TOTAL revenue at time t.

Explanation:

f(t) is the revenue at the time t at the first restaurant.

g(t) is the revenue at the time t at the second restaurant.

If we want to know the TOTAL revenue at the time t, we would sum these quantities:

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So F(t)=f(t)+g(t) represents the TOTAL revenue at time t.

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3 years ago
Stock A has an expected return of 8%, stock B has an expected return of 2%, and the return on Treasury-Bills is 4%. You buy $200
Tomtit [17]

Answer:

The expected return of your portfolio is 6.02%

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  A          $200                   8%                      $200/$300 = 0.67

  B          $100                    2%                      $100/$300 = 0.33

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3 0
3 years ago
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Answer:

It is more convenient to produce the sails in house.

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Unitary variable cost= 100 + 80 + 25= 205

It is more convenient to produce the sails in house.

8 0
3 years ago
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