Kevin's Bacon Company Inc. has earnings of $9 million with 2,500,000 shares outstanding before a public distribution. Seven hundred thousand shares will be included in the sale, of which 500,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her. The net price from the offering will be $23.50 and the corporate proceeds are expected to produce $1.5 million in corporate earnings. a. What were the corporation's earnings per share before the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. What are the corporation's earnings per share expected to be after the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share

Kevin's Bacon Company Inc. has earnings of $9 million with 2,500,000 shares outstanding before a public distribution. Seven hundred thousand shares will be included in the sale, of which 500,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her. The net price from the offering will be $23.50 and the corporate proceeds are expected to produce $1.5 million in corporate earnings. a. What were the corporation's earnings per share before the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share b. What are the corporation's earnings per share expected to be after the offering? (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share

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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Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct.
Toronto Corporation wants to raise $1,210,000 via a rights offering. The company currently has 220,000 shares of common stock outstanding that sells for $32 per share. The issue will allow current stockholders to purchase one additional share for 5 rights. a) What will be the ex-rights stock price, the value of a right, and the appropriate subscription price? b) If 2 rights are needed to purchase on additional share, how does the stockholders’ wealth change? c) Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?
Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct, and the answer 20459.29 is also not correct
Venture plc has issues ordinary shares of 20 million £1.00 shares. On 7th June, the Stock Exchange closing price of the shares was £12.00. Early on the morning of 8th June, the business publicly announced that its plan to acquire another business. On 9th June, the business announced its intention to raise the necessary money to finance the acquisition, totaling £100 million, through a rights issue priced at £8.00 per share. Required: (a) Determine how many new shares need to issue and the theoretical ex-rights price. (b) Calculate the value of rights per existing share and the effect on the wealth of a person who owns 200 shares in Venture plc before the rights issue, in each case where the shareholder takes up the rights, sells the rights and does nothing. (c) Discuss why companies make rights issues of equity, rather than raising the equity in some other way.
Muscat Ceramic Company asks Ms. Mona, the accountant of the company to calculate the total liabilities from the details provided to her. The details are creditors RO 15000, bank overdraft RO 15000, cash in hand RO 20000, stock RO 30000, plant and machinery RO 15000 and cash at bank RO 16000. O a. RO 46000 O b. None of the options O c. RO 30000 O d. RO 42500
Atlas Inc. currently has 20 million shares outstanding. The current stock price is $35/share. The company has decided to do a rights issue. Every existing shareholder will be given 1 right for each share that they own. It will take 4 rights to buy one new share at a price of $25 per share. How much money will the company raise if all of the rights are exercised? Question 9 options: A) $700,000,000 B) $450,000,000 C) $500,000,000 D) $125,000,000 E) $105,000,000
Teasler Inc. currently trades at $40 and has 9 million shares outstanding with Net Income of $12 Million. The Board decides to use a rights offering to raise new capital. Each shareholder will receive one right for each share. Laila Sims currently owns 4,000 shares of Teasler stock. Four rights plus $34 cash are needed to buy one new share. The ex-rights date is in 30 days. a. What is the value of a right? b-1. How many of the new shares could Laila buy if she exercised all her rights? b-2. How much cash would this require? c. How many new shares is Teasler issuing and what are the proceeds? d. If the price of Teasler shares price moves to $30 what is the value of the right ( Assume still rights-on)
Prahm Corp. wants to raise $4.7 million via a rights offering. The company currently has 530,000 shares of common stock outstanding that sell for $55 per share. Its underwriter has set a subscription price of $30 per share and will charge the company a spread of 6 percent. If you currently own 5,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Sale proceeds
An investor currently owns 6104 shares of LIWK Inc. LIWK Inc. has a high-dividend-payout policy and this year will pay $5 cash dividend on its shares selling currently at $69. Assume that an Investor: wants a low-dividend-payout policy. is now taxed at 15% on capital gains and 15% on dividend distributions. originally paid a price for these shares equal to their current price. If an investor need only $500, how many shares should be acquired by the Investor on ex-date in order to undo the dividend policy of LIWK Inc.?
Ray is about to go public. Its present stockholders own 530,000 shares. The new public issue will represent 1,000,000 shares. The shares will be priced at $20 to the public with a 10% spread. The out-of-pocket costs in addition to the spread will be $570,000. What are the net proceeds to Ray?
Jasmine Flowers must raise $227 million for its future expansion. To do so, Jasmine expects to issue new common stock. Investment bankers have informed the company the flotation costs will be 5.5 percent of the total amount issued plus $556,000 in additional costs associated with the issue. Jasmine can issue its stock for $40 per share. Determine how many shares Jasmine must sell to net $227 million after flotation costs. Round your answer to the nearest whole number. shares?
You own 6,000 shares of Irri-gate Co. The company has decided to pay a special dividend of $1.50 per share. Dividend payments are taxed at 15 per cent. You intend to reinvest your dividend back into the company, but the company does not have a dividend reinvestment program. To reinvest through your broker, you will have to pay a $55 commission. If the company's shares are trading at $13.50 following the dividend payment, how many additional shares will you be able to purchase?

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