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When a corporation buys back its own common stocks (that is known as Treasury stocks) from existing shareholders, the company decreases the size of its

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When a corporation buys back its own common stocks (that is known as Treasury stocks) from existing shareholders, the company decreases the size of its total assets. True False You are a shareholder of a corporation. It has 50,000 shares of common stocks outstanding now. Its recent net profit was $100,000. The company intends to issue (sell) additional 10,000 shares of new common stocks at $100 per share. By selling them, the company can obtain $1,000,000 of cash for its new business project. The project is expected to increase sales by $500,000; and its net profit by $150,000 in the next year. The company asks you to vote for this decision. Which one of the following criteria should be the ultimate measurement tool as a shareholder to decide whether to approve or reject this proposal? The growth rate of the sales as the result of the new investment The growth rate of net profit as the result of the new investment The growth rate of the Earnings Per Share as the result of the investment The growth rate of the Total Assets of the company as the result of the investment. The growth rate of the Total Equity of the company as the result of the new investment

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