Hassinah, Incorporated, is proposing a rights offering. Presently there are 1,000,000shares outstanding at $78 each. There will be 100,000 new shares offered at $70 each.a. What is the new market value of the company? (Do not round intermediatecalculations.)b. How many rights are associated with one of the new shares? (Do not roundintermediate calculations.)c. What is the ex-rights price? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)d. What is the value of a right? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)a. New market valueb. Number of rights neededc. Ex-rights priced. Value of a right

Right shares are offered to existing shareholders in proportion of their existing shareholding.

Answered: Hassinah, Incorporated, is proposing a…

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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(Multiple Choice) Kahula Corporation issues common shares for $7 each on the Shanghai Stock Exchange in 2005. At the end of 2021, the market value of those shares 1. Would be lower if they were converted to preferred shares 2. Could be any price, but would typically be lower than $7 3. Cannot be less than $7 4. Cannot be more than $7 5. Could be higher or lower than $7, depending on the performance of the company and the interaction between buyers and sellers of its shares
Blue Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.11 per share and the stock currently sells for $42 per share. There are 2,500 shares outstanding. Ignore taxes and other imperfections. If Blue Corp. pays a dividend, what will be the dividend per share? After the dividend is paid, how many shares will be outstanding and what will the price per share be? Enter your answers rounded to 2 DECIMAL PLACES. NOTE: Fractional shares are possible (Ex. 0.49 shares) Dividend 2.2 ☑ Correct response: 2.2±0.01 Shares outstanding = 2500 Correct response: 2,500 Stock price = 39.8 Correct response: 39.8±0.01 Click "Verify" to proceed to the next part of the question. After the $2.2 dividend, the price falls to $39.8 per share. What are earnings per share (EPS) and the price earnings (P/E) ratio? Enter your answers rounded to 2 DECIMAL PLACES. EPS = Number P/E RatioNumber Click "Verify" to proceed to the next part of the…
Nataro, Inc is planning on merging with Celestia Corp. Nataro, Inc with will pay shareholders the current value of their stock using shares of Nataro as the form of payment. Nataro has 5600 shares outstanding at a market price of $27.25 per share. Celestia Corp has 8,000 shares outstanding at a market price of $5.75 per share. The expected synergy created by the merger is $4200. What is the value of the merged firm (excludes cost of acquisition)? A. 205600 B. 201400 C. 159600 D. 54400 E. 68750
Hassinah, Incorporated, is proposing a rights offering. Presently, there are 800,000 shares outstanding at $48 each. There will be 160,000 new shares offered at $40 each. a. What is the new market value of the company? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. How many rights are associated with one of the new shares? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. What is the ex-rights price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the value of a right? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. New market value b. Number of rights needed c. Ex-rights price d. Value of a right
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 6,400 1,600 Price per share $ 48 $ 19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,900. a. If Firm T is willing to be acquired for $21 per share in cash, what is the NPV of the merger? b. What will the price per share of the merged firm be assuming the conditions in (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If Firm T is willing to be acquired for $21 per share in cash, what is the merger premium? d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T's shares, what will the price per share of the merged firm be? (Do not round intermediate calculations and round your answer to 2…
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?
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Hoobastink Mfg. is considering a rights offer. The company has determined that the ex- rights price will be $61. The current price is $68 per share, and there are 10 million shares outstanding. The rights offer would raise a total of $60 million. What is the subscription price?
Consider the following table, which is the ECN book for Intertech Company's stock. Entry Number Bid or Ask? Bid Bid Bid Bid Ask Ask Ask Ask 5 ECN Book for Intertech Company Shares 1,000 400 6 7 1 2 3 4 5 8 6 7 8 700 Suppose a new limit order is placed to purchase as many shares as possible at a price of no more than $40.42. A total of be purchased. 300 400 200 100 Which entries will be removed from the ECN after the transaction is complete? Check all that apply. 900 Price $40.06 $40.13 $40.22 $40.31 $40.42 $40.53 $40.63 $40.75 shares will
A large manufacturing company has offered to purchase Composites, Inc. for$32 per share. Before the merger proposal announcement, Composites wastrading at $20/share and, after the announcement, its share price jumped up to$28/share. It is estimated that, if the merger fails to go through, the price ofComposites will drop to $15/share. a) Assuming that the risk-free interest rate is 0%, how would you describea long position in Composites as a combination of positions in a risk-freebond and a binary put option? Please show your workings in detial.b) Assuming that the risk-free interest rate is 0%, how would you describea long position in Composites as a combination of positions in a risk-freebond and a binary call option? Please show your workings in detial.c) Please explain the event-driven strategies through the selling insuranceview.
A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 5 percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread is 4 percent of the issue price) a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue price to the public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number of shares" answer in millions. 4 Issue price Number of shares million b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Investment bankers' revenue million i
Bermuda Triangle Corporation (BTC) currently has 370,000 shares of stock outstanding that sell for $100 per share. Assume no market Imperfections or tax effects exist. Determine the share price and new number of shares outstanding if: (Do not round intermediate calculatlons. Round your prlce per share answers to 2 decimal places, e.g., 32.16, and shares outstanding answers to the nearest whole number, e.g., 32.) a. BTC has a five-for-three stock split. b. BTC has a 12 percent stock dividend. c. BTC has a 38.0 percent stock dividend. d. BTC has a four-for-seven reverse stock split. a. Price per share Shares outstanding b. Price per share Shares outstanding c. Price per share Shares outstanding d. Price per share Shares outstanding

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