Damron, Incorporated, has 230,000 shares of stock outstanding. Each share is worth $84, so the company's market value of equity is $19,320,000. Suppose the firm issues 54,000 new shares at the following prices: $84, $78, and $72. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "O". Round your answers to 2 decimal places, e.g., 32.16.)
Damron, Incorporated, has 230,000 shares of stock outstanding. Each share is worth $84, so the company's market value of equity is $19,320,000. Suppose the firm issues 54,000 new shares at the following prices: $84, $78, and $72. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "O". Round your answers to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Ch 4,14-16, 18-19) i
Damron, Incorporated, has 230,000 shares of stock outstanding. Each share is worth
$84, so the company's market value of equity is $19,320,000. Suppose the firm issues
54,000 new shares at the following prices: $84, $78, and $72. What will be the ex-rights
price and the effect of each of these alternative offering prices on the existing price per
share? (Leave no cells blank; if there is no effect select "No change" from the
dropdown and enter "O". Round your answers to 2 decimal places, e.g., 32.16.)
a. $84
b. $78
c. $72
Price Ex-Rights
Effect
Amount
Saved
per share
per share
per share
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