ABC Corporation has total shareholder equity of $150,000 at year end. The company needs to pay $30,000 to its preferred stockholders. If ABC has issued 40,000 common shares, what is the book value per share?
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- National Power has 1020000 shares outstanding. Each share sells for $25. The company wants to raise $5100000 in new equity. Suppose the exercise (subscription) price is set at $15 per share. Calculate the Number of Shares per Right.a) You currently own 600 shares of JKL, Inc. JKL is an all-equity firmthat has 75,000 shares of stock outstanding at a market price of $40a share. The company’s earnings before interest and taxes are $140,000.JKL has decided to issue $1 million of debt at 8 percent interest.This debt will be used to repurchase shares of stock. How many sharesof JKL stock must you sell to unlever your position if you can loanout funds at 8 percent interest?b) If the cost of equity is 25%, the WACC is 16% and cost of debt is 10%,what will be the implied D/E ratio?c) Why is financial leverage considered as a fair-weather friend? (Max50 words) Give a step by step break down of the answerWhat is the total par value of the issued shares of this financial accounting question?
- The Windsor Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures, and has decided on a rights issue. The issue will allow current stockholders to purchase one additional share for 20 rights at a subscription price of $6 per share. a) How many new shares must be issued? b) What will be the ex-rights stock price? c) If the ex-rights price were set at $7.90, would you as a potential new stockholder choose to buy shares ex-rights or buy shares at the old price and exercise your rights? d) Suppose that the company was also considering structuring the rights issue to allow for an additional share to be purchased for 10 rights at a subscription price of $3. Prove that a stockholder with 100 shares would be indifferent between purchasing a new share for 10 rights at $3 or purchasing a new share for 20 rights at $6. e) Why do you think the company chose a rights issue rather than a…Toady Inc. has 2 million shares outstanding selling at $70 a share. The Company intends to undertake a rights issue that allows 1 share to be purchased for every 5 shares currently held by shareholders for $40 each. If all shareholders take up their entitlement, which one of the following is true? The stock price will fall to $65. The number of shares outstanding will fall to 1.6 million. The firm will raise $13.33 million. The total value of the firm will equal $124 million.You currently own 1,100 shares of JKL, Inc. JKL is currently an all equity that has 900,000 shares of stock outstanding at a market price of $30 a share. The company's earnings before interest and taxes are $5,400,000. JKL recently decided to issue $2,700,000 of debt at 5 percent interest. This debt will be used to repurchase shares of stock. Ignore taxes and answer the following two questions: Part A: What is JKL's target debt to asset ratio? 20 % Part B: How many shares of JKL stock must you sell to undo the leverage? Assume that you can loan out those funds at 5 percent interest. 220 x
- American Health Systems has 5,600,000 shares of stock outstanding and will report earnings of $17 million in the current year. The company is considering the issuance of 1,300,000 additional shares, which can only be issued at $21 per share. a. Assume that American Health Systems can earn 4 percent on the proceeds. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. Should the new issue be undertaken based on earnings per share? O Yes O No 10 B Next >Damron, Incorporated, has 205,000 shares of stock outstanding. Each share is worth $79, so the company’s market value of equity is $16,195,000. Suppose the firm issues 44,000 new shares at the following prices: $79, $73, and $67. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share?Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of dilution in earnings per share?
- Zyra Company is conducting an initial public offering of 2,500,000 shares. Zyra Company already had 4,000,000 issued and outstanding shares, The new IPO shares shall be sold at P3 per share. What is the tax on initial public offering?Assume the issuer incurs $1 million in otherexpenses to sell 3 million shares at $40 each to anunderwriter and the underwriter sells the shares at$43 each. By the end of the first day’s trading, theissuing company’s stock price had risen to $70.What is the total cost of underpricing?The Hamilton Corporation has 4 million shares of stock outstanding and will report earnings of $6,360,000 in the current year. The company is considering the issuance of 2 million additional shares that can only be issued at $38 per share. a. Assume the Hamilton Corporation can earn 7.00 percent on the proceeds. Calculate the earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. Should the new issue be undertaken based on earnings per share? O Yes O No Prev 1 of 10 Next >